Unit 7 Econ Vocabulary

Total revenues minus explicit costs, including depreciation

• Accounting Profit

• Average Profit

• Average Total Cost

• Economic Profit

Profit divided by the quantity of output produced; also known as profit margin

• Accounting Profit

• Average Profit

• Diminishing Marginal Productivity

• Economic Profit

​​General rule that as a firm employs more labor, eventually the amount of additional output produced declines

• Explicit Costs

• Law of Diminishing Marginal Utility

• Long Run

• Diminishing Marginal Productivity

Total revenues minus total costs (explicit plus implicit costs)

• Economic Profit

• Average Profit

• Accounting Profit

• Production

Out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials

• Implicit Costs

• Marginal Costs

• Explicit Costs

• Total Costs

Resources that firms use to produce their products, for example, labor and capital

• Diminishing Marginal Productivity

• Factors of Production

• Fixed Costs

• Firm

An organization that combines inputs of labor, capital, land, and raw or finished component materials to produce outputs.

• Private Enterprise

• Production

• Revenue

• Firm

Cost of the fixed inputs; expenditure that a firm must make before production starts and that does not change regardless of the production level

• Explicit Costs

• Implicit Costs

• Fixed Costs

• Production

Factors of production that can’t be easily increased or decreased in a short period of time

• Fixed Inputs

• Economic Profit

• Factors of Production

• LRAC Curve

Opportunity cost of resources already owned by the firm and used in business, for example, expanding a factory onto land already owned

• Explicit Costs

• LRAC Curve

• Implicit Costs

• Private Enterprise