Term
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Definition
| Actual payments a firm makes to its factors of production and other suppliers. |
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Term
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Definition
| All the firm's opportunity costs of the resources supplied by the firm's owners. |
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Term
| Increasing Returns to Scale |
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Definition
| As inputs are added, output goes up by more than a proportionate amount. Thus average cost falls as output rises. |
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Term
| Constant Returns to Scale |
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Definition
| Doubling input will produce exactly double the output. Thus average cost i constant as output rises. |
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Term
| Diminishing Returns to Scale |
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Definition
| Doubling input will result in less than double the output. Thus average cost rises as output rises. |
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Term
| Minimum Efficient Quantity |
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Definition
| The smallest quantity of output that will achieve miniumum Long Run Average Cost. |
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Term
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Definition
| Anything that prevents new suppliers from entering a market, and allows price to be greater than average cost. (E.g. licenses, patents, etc.) |
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