OUTLINE -- CHAPTER 2 Show I. The Necessity of Choice -- Production Possibilities A. The Economizing Problem -- The Necessity of ChoiceThe choices necessitated because society's material wants for goods and services are unlimited but the resources available to satisfy these wants are limited. II. The Necessity of Choice -- HOW? pp. 4-5, "Rational Behavior", Marginalism: Benefits and Costs" III. Economic Systems -- the "isms" A particular set of institutional arrangements and a coordinating mechanism for solving the economizing problem; a method of organizing an economy; of which the market economy command economy and traditional economy are three general types. A. Criteria1. who owns? IV. The Circular Flow Model The flow of resources from households to firms and of products from firms to households. These flows are accompanied by reverse flows of money from firms to households and from households to firms. A. Two Markets1. product market What is the term for the extra cost of producing one more unit of output?Marginal cost is the cost to produce one additional unit of production. It is an important concept in cost accounting as marginal cost helps determine the most efficient level of production for a manufacturing process.
What is the cost per unit of output called?The correct answer is average cost. Key Points. The average cost per unit of production (AC) is also known as the average total cost (ATC). Divide the total cost (TC) by the quantity produced by the company (Q) to find it. The average cost has a significant impact on how companies price their goods.
When an additional unit of output is produced?Marginal revenue is the increase in revenue that results from the sale of one additional unit of output. While marginal revenue can remain constant over a certain level of output, it follows from the law of diminishing returns and will eventually slow down as the output level increases.
What is the additional cost incurred in the production of a one more unit of good or service?Marginal cost is the additional cost incurred in the production of one more unit of a good or service.
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