Production & Costs (Unit 3.1)

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Across
  1. 3. The additional cost incurred from producing one more unit of output. The MC curve intersects both the AVC and ATC curves at their minimum points.
  2. 5. [blank] costs: that do not change with the level of output (e.g., rent, insurance). They must be paid even if output is zero.
  3. 7. Profit from Total Revenue - Explicit Costs. This is the number typically reported on financial statements.
  4. 8. Law of Diminishing Marginal [blank]: A principle stating that as successive units of a variable input (e.g., labor) are added to a fixed input (e.g., capital), the marginal product of the variable input will eventually decline.
  5. 12. [blank] cost: Total variable cost divided by the quantity of output. $AVC = TVC / Q$. This curve is typically U-shaped.
  6. 14. [blank] costs: costs that change directly with the level of output (e.g., raw materials, wages for hourly workers).
  7. 15. [blank] costs: The sum of all fixed and variable costs. $TC = TFC + TVC$.
  8. 17. Profit from Total Revenue - (Explicit Costs + Implicit Costs). This measures profit relative to the next best alternative. A positive economic profit means the firm is doing better than its next best option.
Down
  1. 1. [blank] costs: The traditional, out-of-pocket monetary payments a firm makes to outsiders for resources (e.g., wages, rent, materials). These are the costs accountants use.
  2. 2. A period of time in which at least one of a firm's inputs (usually capital/plant size) is fixed.
  3. 4. [blank] cost: Total cost divided by the quantity of output. $ATC = TC / Q$ or $ATC = AFC + AVC$. This curve is also U-shaped.
  4. 6. [blank] Product The additional output produced by adding one more unit of a variable input (like one more worker).
  5. 9. [blank] Product The total quantity (output) of a good produced with a given amount of input.
  6. 10. [blank] cost: Total fixed cost divided by the quantity of output. $AFC = TFC / Q$. It always decreases as output increases.
  7. 11. The condition where economic profit is [blank] occurs when Total Revenue equals the sum of all Explicit and Implicit Costs. It means the firm is earning just enough to cover all its costs, including the entrepreneur's opportunity cost. It's the long-run equilibrium state in perfect competition.
  8. 13. [blank] costs: The opportunity costs of using resources the firm already owns, rather than paying for them. This includes the value of the entrepreneur's time or the income that could have been earned by using the firm's capital for something else.
  9. 16. A period of time in which all of a firm's inputs are variable. Firms can enter or exit the market in the long run.