accounting profit total revenues minus explicit costs, including depreciation average profit profit divided by the quantity of output produced; profit margin average total cost total cost divided by the quantity of output average variable cost variable cost divided by the quantity of output constant returns to scale expanding all inputs proportionately does not change the average cost of production diseconomies of scale the long-run average cost of producing each individual unit increases as total output increases economic profit total revenues minus total costs (explicit plus implicit costs) explicit costs out-of-pocket costs for a firm, for example, payments for wages and salaries, rent, or materials firm an organization that combines inputs of labor, capital, land, and raw or finished component materials to produce outputs. fixed cost expenditure that must be made before production starts and that does not change regardless of the level of production implicit costs opportunity cost of resources already owned by the firm and used in business, for example, expanding a factory onto land already owned long-run average cost (LRAC) curve shows the lowest possible average cost of production, allowing all the inputs to production to vary so that the firm is choosing its production technology marginal cost the additional cost of producing one more unit private enterprise the ownership of businesses by private individuals production technologies alternative methods of combining inputs to produce output production the process of combining inputs to produce outputs, ideally of a value greater than the value of the inputs revenue income from selling a firm’s product; defined as price times quantity sold short-run average cost (SRAC) curve the average total cost curve in the short term; shows the total of the average fixed costs and the average variable costs total cost the sum of fixed and variable costs of production variable cost cost of production that increases with the quantity produced CC licensed content, Shared previously Principles of Microeconomics Chapter 7 Glossary. Authored by : OpenStax College. Located at : http://cnx.org/contents/6i8iXmBj@10.31:75YRzeYw@8/Introduction-to-Cost-and-Indus . License : CC BY: Attribution . License Terms : Download for free at http://cnx.org/content/col11627/latest