Micro Econ
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| Production Function | Relationship between quantity of inputs and quantity of output
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| Industrial Organization | Study of how firms' decisions about prices and quantities depend on the market conditions they face
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| Profit | TR-TC
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| TR | PQ
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| Total Revenue | Amount a firm receives for the sale of its output
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| Total Cost | Market value of the inputs a firm uses in production
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| Explicit costs | Input costs that require an outlay of money by the firm
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| Implicit Costs | Input costs that do not require an outlay of money by the firm; ignored by accountants
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| TC | EC+IC
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| Economic Profit | Total costs includes both explicit and implicit costs; Accounting profit-implicit costs
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| Accounting Profit | TR-TEC; usually larger than economic profit
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| Fixed Input | An input whose quantity is fixed for a period of time and cannot be varied
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| Variable input | An input whose quantity the firm can vary at any time
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| Long run | The time period in which all inputs can be varied
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| Short Run | The time period in which at least one input is fixed
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| Capital | fixed input
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| Labor | varied in the short run
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| Marginal Product | The additional quantity of output tat is produced by using one more unit of that input
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| MPL | Delta Q/ Delta L
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| Marginal product of an input declines | as the quantity of the input increases
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| Production function gets flatter | as more inputs are being used
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| Marginal product of labor | The increase in the quantity of output when you increase the quantity of that input by one unit
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| FC+VC | TC
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| Total-cost curve | Relationship between quantity produced and total costs; gets steeper as the amount produced rises
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| Average fixed cost; AFC | FC/Q
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| Average Variable Cost; AVC | VC/Q
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| Average Total Cost; ATC | TC/Q
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| Cost of a typical unit of output | If total cost is divided evenly over all the units produced
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| Marginal Cost; MC | Delta TC / Delta Q
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| MC: Increase in total cost | From producing an additional unit of output
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| Rising marginal cost curve | because of diminishing marginal product
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| AFC | Always declines as output rises
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| AVC | Typically rises as output increase because of diminishing marginal product
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| Bottom of the U-Shape | At quantity that minimizes average total cost
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| Efficient Scale | Quantity of output that minimizes ATC
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| MC < ATC | average total cost is falling
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| MC > ATC | average total cost is rising
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| @ Minimum | Marginal-cost curve crosses the average-total-cost curve
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| Marginal cost eventually rises | with the quantity of output
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| Average-total-cost curve | U-Shaped
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| Long run cost curves | Flatter than short run cost curves
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| Short run cost curves | Lie on or above the long-run cost curves
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| Increasing returns to scale | When long run average total cost declines as output increases; increasing specialization among workers
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| Decreasing returns to scale | When long run average total cost increases as output increases
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| Constant returns to scale | When long run average total cost is constant as output increases; Increasing coordination problems
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