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19 Cards in this Set
- Front
- Back
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"Explicit cost"
(p. 226) |
An _______ is a cost that involves actually laying out money.
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"Implicit cost"
(p. 226) |
An ________ does not require an outlay of money; it is measured by the value, in dollar terms, of benefits that are forgone.
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"Accounting profit"
(p. 227) |
The __________ of a business is the business's revenue minus the explicit cost and depreciation.
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"Economic profit"
(p. 227) |
The ___________ of a business is the business's revenue minus the opportunity cost of its resources. It is usually less than the accounting profit.
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"Capital"
(p. 228) |
The ______ of a business is the value of its assets--equipment, buildings, tools, inventory, and financial assets.
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"Implicit cost of capital"
(p. 228) |
The __________ is the opportunity cost of the capital used by a business--the income the owner could have realized from that capital if it had been used in its next best alternative way.
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"Marginal cost"
(p. 231) |
The ________ of producing a good or service is the additional cost incurred by producing one more unit of that good or service.
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"Constant marginal cost"
(p. 231) |
Production of a good or service has _________ when each additional unit costs the same to produce as the previous one.
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"Marginal cost curve"
(p. 232) |
The _________ shows how the cost of producing one more unit depends on the quantity that has already been produced.
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"Increasing marginal cost"
(p. 232) |
Production of a good or service _______ when each additional unit costs more to produce than the previous one.
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"Marginal benefit"
(p. 233) |
The _______ of a good or service is the additional benefit derived from producing one more unit of that good or service.
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"Optimal quantity"
(p. 234 |
The ________ is the quantity that generates the maximum possible total net gain.
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"Principle of marginal analysis"
(p. 235 |
The __________ says that the optimal quantity is the quantity at which marginal benefit is equal to marginal cost.
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"Sunk cost"
(p. 238) |
A _______ is a cost that has already been incurred and is nonrecoverable; it should be ignored in decisions about future actions.
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"Interest rate"
(p. 240) |
When someone borrows money for a year, the ______ is the price, calculated as a percentage of the amount borrowed, charged by the lender.
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"Present value"
(p. 241) |
The _______ of $1 realized one year from now is equal to $1/(1+r): the amount of money you must lend out today in order to have $1 in one year. It is the value to you today of $1 realized one year from now.
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"Net present value"
(p. 243) |
The _________ of a project is the present value of current and future benefits minus the present value of current and future costs.
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"Decreasing marginal benefit"
(p. 233) |
There is _______ from an activity when each additional unit of the activity produces less benefit than the previous unit.
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"Marginal benefit curve"
(p. 233) |
The _________ shows how the benefit from producing one more unit depends on the quantity that has already been produced.
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