Microeconomics Unit 3

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  • Created by: l1lijan
  • Created on: 19-11-19 19:45
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  • Costs
    • Depreciation
      • The cost of replacing capital equipment that has worn out.
    • Marginal Cost
      • The cost of producing one more unit of a good.
        • Change in total cost / Change in quantity
    • Short run
      • One factor of production is fixed
    • Long run
      • All factors of production are variable
    • Very long run
      • All factors of production are variable and technology can change.
    • Very short run
      • All factors of production are fixed.
    • Law of diminishing marginal returns
      • Occurs when at least one factor of production cannot be changed.
    • Labour productivity
      • Output per worker
    • Fixed cost
      • Costs that don't change with the level of production
        • Rent, salaries
    • Law of diminishing marginal returns
      • A short run concept
    • Economies of scale
      • a long run concept
    • Shutdown point
      • When average variable costs are higher than average revenue
      • If they are more than covering their AVCs, a contribution can be made towards their fixed costs.

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