AP课程微观经济学名词解释(5)

　　Please highlight critical terms;

　　*=not important for exam but you should know

　　Chapter Five Cost &Production

　　long run- period of time long enough to permit a decision maker to change anything. short run- a period of time in which some factors or conditions are fixed and cannot be changed by a decision-maker

　　total product (TP)-the total output that can be produced by utilizing a given number of units of a variable input (usually labor) marginal product (MP)-the additional output that can be produced by adding one more unit of a variable input (usually labor). MP=change in q/change in L (law of) diminishing returns- the situation in which adding an additional unit of variable input (such as labor) increases output by a smaller increment than previous units of labor average product (AP)-the overall output per unit of variable input (usually labor). AP=q/L

　　total cost (TC)- all costs; the sum of FC+VC. implicit cost-cost which considers opportunity cost of resources as well as money costs. explicit cost-money costs or costs for which a bill is paid.

　　*sunk costs- costs that are associated with past decisions and thus cannot influence current decisions. total cost- the sum of all costs, including implicit and explicit costs. variable cost (VC)-that cost which rises as more of a good is produced in the short run; costs of inputs which can be varied in amounts in the short run. In the long run, all costs are variable, so we do not make the distinction in the long run. opportunity cost of capital- the normal or usual annual return one could expect from the dollar value of a capital investment (if the dollar amount was invested in some other way). This is the implicit cost of capital assets of a firm. marginal cost (MC)-the change in cost when one more unit of a good or service is produced. This generally falls when output is increased from very small amounts, but rises when output is increased from moderate or large levels.

　　average variable cost (AVC)-the overall variable cost (cost from variable input) per unit of output. This generally falls when output is increased from small amounts, but rises when output is increased from large levels.

　　average fixed cost (AFC)-the overall fixed cost (cost from fixed inputs) per unit of output; this declines as more output is produced. AFC=FC/q average total cost (ATC)- the overall cost (from all inputs) per unit of output. This generally falls when output is increased from small amounts, but rises when output is increased from large levels. ATC=TC/q; also ATC=AFC+AVC. long run average (total) cost (LRATC or LRAC)-average (total) cost in the long run, determined by the boundary of all the possible short run average total cost curves. This generally falls when output is increased from small amounts, is unchanged when output is moderate, but rises when output is increased from large levels.

　　constant cost industry-if the long run average cost curve does not change as new firms enter the market, the industry is said to be a constant cost industry, and the long run supply curve is horizontal. increasing cost industry-if the long run average cost curve moves up as the number of price taker firms rises, the long run supply curve for the industry may be upward sloping. This may happen if there are diseconomies of scale in producing some input that this industry requires. decreasing cost industry-if the long run average cost curve moves down as the number of price taker firms rises, the long run supply curve for the industry may be downward sloping. This may happen if there are economies of scale in producing some input that this industry requires.

　　economies of scale-declining long run average cost; also called increasing returns to scalediseconomies of scale-rising long run average cost; also called decreasing returns to scale

　　constant returns to scale-long run average cost is neither rising nor falling.

　　economic profit-revenue minus all costs (explicit and implicit) accounting profit-revenues minus explicit costs

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