| cost function | A graph which shows how much various amounts of production cost.
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| diminishing returns | The notion that there exists a point where the addition of resources increases production but does so at a decreasing rate.
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| division of labor | Workers divide the tasks in such a way that each can build momentum and not have to switch jobs.
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| economic cost | All costs of a business: those that must be paid as well as those incurred in the form of forgone opportunities.
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| fixed costs | Costs of production that cannot be changed.
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| fixed inputs | Resources that do not change.
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| marginal cost (MC) | The increase in cost associated with increasing production by one unit.
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| marginal revenue (MR) | Additional revenue the firm receives from the sale of each unit.
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| monopoly | A situation in a market where there is only one firm producing the good.
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| perfect competition | A situation in a market where there are many firms producing the same good.
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| production function | A graph which shows how many resources are needed to produce various amounts of output.
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| profit | The money that a firm makes: revenue - cost
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| revenue | The money that comes into the firm from the sale of goods and services.
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| variable costs | Costs of production that can be changed.
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| variable inputs | Resources that can easily be changed.
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2003 McGraw-Hill Higher Education