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Economics - Chapter 7

Chapter 7. Producers In The Short Run.
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Side ASide B
single proprietorship
a firm that has one owner who is personally responsible for the firm's actions and debts
ordinary partnership
a firm that has two or more joint owners, each of whom is personally responsible for the firm's actions and debts
limited partnership
a firm that has two classes of owners: general partners, who take part in managing the firm and are personally liable for the firm's actions and debts, and limited partners, who take...
corporation
a firm that has legal existence separate from that of the owners
state-owned enterprise
a firm that is owned by the government. in Canada, these are called crown corporations
non-profit organizations
firms that provide goods and services with the objective of just covering their costs. these are often called NGOs, for non-governmental organizations
multinatinal enterprises (MNEs)
firms that have operations in more than one country
dividends
profits paid out to shareholders of corporation
bond
a debt instrument carrying a specified amount, a schedule of interest payments, and (usually) a date for redemption of its face value
intermediate products
all outputs that are used as inputs by other producers in a further stage of production
economic profits
the difference between the revenues received from the sale of output and the opportunity cost of the inputs used to make the output. negative economic profits are called economic losses
short run
a period of time in which the quantity of some inputs cannot be increased beyond the fixed amount that is available
fixed factor
an input whose quantity cannot be changed in the short run
variable factor
an input whose quantity can be changed over the time period under consideration
long run
a period of time in which all inputs may be varied, but the existing technology of production cannot be changed
very long run
a period of time that is long enough for the technological possibilities available to a firm to change
total product (TP)
total amount produced by a firm during some time period
average product (AP)
total product divided by the number of units of variable factor used in its production
marginal product (MP)
the change in total output that results from using one more unit of a variable factor
law of diminishing returns
the hypothesis that if increasing quantities of a variable factor are applied to a given quantity of fixed factors, the marginal product of the variable factor will eventually decrease
total cost (TC)
the total cost of producing any given level of output; it can be divided into total fixed cost and total variable cost
total fixed cost (TFC)
all costs of production that do not vary with the level of output
total variable cost (TVC)
total costs of production that vary directly with the level of output
average total cost (ATC)
total cost of producing a given output divided by the number of units of output; it can also be calculated as the sum of average fixed costs and average variable costs. Also called unit...
average fixed cost (AFC)
total fixed costs divided by the number of units of output
average variable cost (AVC)
total variable costs divided by the number of units of output
marginal cost (MC)
the increase in total cost resulting from increasing output by one unit

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