KC3 Vocab

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Accounting Profit

Back

A business's revenue minus the explicit cost and depreciation.

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Economic Profit

Back

A business's revenue minus the opportunity cost of resources; usually less than the accounting profit.

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Explicit Cost

Back

A cost that involves actually laying out money.

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Implicit Cost

Back

A cost that does not require the outlay of money; it is measured by the value, in dollar terms, of forgone benefits.

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Marginal Cost

Back

The additional cost incurred by producing one more unit of a good or service.

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Marginal Benefit

Back

The additional benefit derived from producing one more unit of a good or service.

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Principle of Marginal Analysis

Back

The proposition that the optimal quantity is the quantity at which marginal benefit is equal to marginal cost.

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Sunk Cost

Back

A cost that has already been incurred and is not recoverable.

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Utility

Back

(of a consumer} a measure of the satisfaction derived from consumption of goods and services.

Front

Principle of diminishing marginal utility

Back

The proposition that each successive unit of a good or service consumed adds less to total utility than did the previous unit.