Robert H. Frank,
Cornell University
Ian C. Parker,
University of Toronto
| Accounting profit | Total revenue minus total explicit costs incurred.
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| Allocative efficiency | A condition in which all possible gains from exchange are realized.
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| Economic profit | Total revenue minus total explicit and implicit costs incurred.
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| Marginal revenue | The change in total revenue that occurs as a result of a 1-unit change in quantity sold.
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| Pecuniary diseconomy | A rise in production cost that occurs when an expansion of industry output causes a rise in the prices of inputs.
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| Price elasticity of supply | The percentage change in quantity supplied that occurs in response to a 1 percent change in product price.
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| Producer surplus | The dollar amount by which a firm benefits by producing a profit-maximizing level of output.
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| Shutdown condition | If price lies everywhere below average variable cost, the firm should shut down in the short run.
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2002 McGraw-Hill Higher Education