Terms Definitions The explicit monetary outlay associated with producing goods o

Question

Terms

Definitions

The explicit monetary outlay associated with producing goods or services

The implicit cost of producing goods or services; the value of what the producer gives up in order to use its production inputs

The cost of producing goods or services, from an economics perspective (equal to ____________________ + ____________________)

A producer’s total revenue minus its economic cost

A producer’s total revenue minus its accounting cost

Costs which do not vary with the producer’s level of output

Costs which have already been committed and cannot be recovered

A producer’s irrational consideration of ______________ in its production decisions

Costs which vary with the producer’s level of output

Fixed costs ÷ Output

Variable costs ÷ Output

A time horizon in which the level of at least one input is fixed

A time horizon in which all costs are variable

Fixed costs + Variable costs

Total cost ÷ Output

?Total cost ÷ ?Output

A mathematical relationship between the producer’s output level and total cost, when the level of at least one input is fixed

A mathematical relationship between the producer’s output level and total cost, when all input levels are variable

The property of a long-run total cost curve whereby if the level of output is increased, total cost rises less than proportionally

The property of a long-run total cost curve whereby if the level of output is increased, total cost rises more than proportionally

The property of a long-run total cost curve whereby if the level of output is increased, total cost rises proportionally

The property whereby a producer can produce two goods (through a joint production process) at a lower cost than it could produce each good separately

The property whereby a producer’s cost from producing two goods jointly (through a joint production process) is greater than its total cost of producing each good separately

Terms

Definitions

Explanation / Answer

(a) Explicit monetary outlay for producing goods and services - Accounting (Explicit) cost

(b) Implicit cost of producing goods and services - Opportunity cost

(c) Cost of producing goods and services from economic perspective (= Explicit/Accounting cost + Implicit/Opportunity cost) - Economic cost

(d) Producer's total revenue less economic cost - Economic profit

(e) Producer's total revenue less Accounting cost - Accounting profit

(f) Costs which do not vary with output- Fixed cost

(g) Costs which already have been committed - Committed (fixed) cost (or Sunk cost)

(h) Producer's irrational consideration of including Sunk costs

(i) Costs which vary with output - Variable costs

(j) Fixed cost divided by output - Average fixed cost

(k) Variable cost divded by output - Average variable cost

(l) Time horizon here at least one cost fixed - Short run

(m) Time horizon where all costs variable - Long run

(n) Fixed cost + Variable cost - Total cost

(o) Total cost divided by output - Average total cost

NOTE: As per Chegg Answering Policy, 1st 15 parts are answered.

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