Economic Costs and Profit Overview

The economic process of transforming inputs into outputs, explaining how businesses decide the quantities of outputs to produce in response to demand.

The relationship between the quantity of inputs used and the quantity of outputs produced. It shows how much output can be generated from a given amount of inputs.

A key decision businesses make in the short run, aimed at using the right quantities of variable inputs to minimize costs while keeping fixed inputs unchanged.

Point where a firm's marginal revenue (MR) equals its marginal cost (MC), indicating the optimal level of production to maximize profit in the short run.

The additional revenue earned from selling one more unit of a product. Calculated as the change in total revenue divided by the change in quantity.

The change in total production cost when an additional unit is produced. Calculated as the change in total cost divided by the change in quantity.

The process firms use to achieve the highest possible profit over a long period, considering all costs and revenues while making strategic decisions about production and market positioning.

The law stating that after a certain level of input is added, each additional unit of input yields smaller increases in output. It's the principle of diminishing marginal productivity.

The cost of all variable inputs – those that can be easily adjusted by a firm, like labor and raw materials. It changes with the level of production.

The cost of all fixed inputs – those that remain constant regardless of the level of production, like rent and machinery.

The sum of total variable cost (TVC) and total fixed cost (TFC), representing the total cost incurred in production.

Variable cost per product, calculated by dividing total variable cost by the quantity of output produced.

Fixed cost per product, calculated by dividing total fixed cost by the quantity of output produced.

The total cost per product, calculated by dividing total cost by the quantity of output produced.

The cost of producing one additional unit of a product. It's the change in total cost divided by the change in quantity.

A market structure where many firms sell identical products, and no single firm has enough market power to influence the market price.

A market with a large number of buyers and sellers, where products are homogeneous, there's free entry and exit, and firms are price takers.

A market where a single seller dominates the market, selling a product with no close substitutes and having significant pricing power.

A market where a small number of large firms control a significant portion of the market, often leading to strategic interactions and price-setting behavior.

A market situation with only one buyer for a product, giving the buyer significant leverage in setting prices.

A market with only a few buyers dominating the market for a product, giving them considerable influence on pricing.

Out-of-pocket costs, the actual payments made by a firm, like wages, rent, and materials.

The opportunity cost of using resources already owned by a firm, like using your own building for business instead of renting it out.

Total revenue minus explicit costs, calculated as money brought in minus money paid out, focusing on cash transactions.

Total revenue minus total cost, including both explicit and implicit costs, reflecting the true economic performance of a firm.

A collection of independent businesses or organizations that collude to manipulate the price of a product or service often by reducing supply or price-fixing.

An Act focused on promoting fair competition in the Philippine marketplace and protecting consumer well-being.