ECO Final Exam

is the producer or business.

is transforming inputs.

is the total revenue minus total cost. 

are non-actual payments “silent costs” or “opportunity costs”

are actual payments that are out of pocket such as rent, labor, utilities

is the total revenue minus explicit costs. It is a cash concept.

is the total revenue minus total cost, and it includes both implicit and explicit costs. 

 Fixed inputs can’t decrease or increase fast or in a short period of time. Where variable inputs are able to increase or decrease in a short period of time. 

The short run is where some factors of production are fixed and a long run is when all production factors are variables. 

is the output of an additional worker. 

according to the textbook “is a characteristic of a production in the short run”

income from selling a firm’s product; defined as price times quantity sold

is when someone seeks to create a business or manage a company and they seek profit as one of their goals. They also produce inputs to provide outputs.

is an equation that tells you how much output a firm can produce with the inputs that it’s given.

are what a firm can pay for the factors of production.

Total costs are the sum of fixed and variable costs of production according to the textbook. The different components in total costs are the inputs and outputs that the firm converts.

are the total costs divided by the quantity of the output.

are the variable costs divided by the quantity of the output.

are the additional cost of producing more than one unit.

Perfect competition market structure is when there are many firms and each one represents different characteristics of the market. Some characteristics are many buyers and many sellers of a homogenous product. Consumers are able to decide the price and firms have to accept that price. Many sellers have low barriers to enter in or out.

is how your industry is organized and set up. The different types of market structures are perfect competition, monopolistic competition, oligopoly, and monopoly.

refers to p.c. firms, you take what the market pays.

is the revenue that is gained from selling another or one more unit.

This is because firms have to accept prices in the market-determined by market forces such as demand and supply under perfect competition.

is when there is no profit or loss, when the profit is zero, and when the revenue covers costs.

is when a firm’s total cost goes over or exceeds the price of a product in the market. The selling price is equal to marginal revenue which is then equal to the average price. You then subtract variable costs which then gives you your contribution margin. You might be able to stay in business because the contribution margin contributes to covering fixed costs.

of a firms in a perfect competition market are to max profit (90%) and minimize loss (10%).

One decision that a firm in perfect competition has to make is how much output to produce. 

This occurs when marginal revenue is equal to marginal costs. A PC firm will only have one choice or option to decide.

means it’s different factors that end up preventing new forms or sellers into the market.

because it will still help cover their variable costs.

Firms are not able to decide what prices they want to charge. They need to charge the price that is given to them by the market.

the first initial shares of stock that a firm has to outside investors.

is a contract in which a borrower for example the federal government or state agrees to repay the amount of money that was borrowed as well as the rate of interest that is accumulated during that time.

is a business that is owned by shareholders who have liability but the liability they have is limited. This is for the company’s debt yet they have a share of the company’s profits. A corporation can either be public or private.

are people who own a part of shares of stock in a firm.

is by dividends paid by the firm and capital gain that is achieved by an investor selling stock for more than what they paid for. 

refers to how easily one can exchange money or financial assets for a good or service

is the monetary value a homeowner would have after selling a house but then still having to pay the loans that they received from the bank in order to purchase the house. 

is that investors take a risk when investing their money but the greater the risk is the more the reward or return should be. According to the textbook the risk and return concept complicates the different tasks of a financial investor.

is when you invest in a wide range of different companies this is important because the use of diversification is in order to avoid or reduce the level of risks. 

Collection or Basket of Stocks from many different companies