technologyA nation’s knowledge of how to produce
goods in the best possible way.
total cost (TC) The sum of total fixed and total vari-
able costs at any level of output.
total fixed costs (TFC) Production costs that do not
vary with the level of output.
total product (TPL) of labor The total quantity of
output produced for a given quantity of labor
employed.
total revenue The price of a good multiplied by the
quantity of that good sold.
total revenue test Total revenue rises with a
price increase if demand is price inelastic and
falls with a price increase if demand is price
elastic.
total utilityThe total happiness received from con-
sumption of a number of units of a good.
total variable costs (TVC)Production costs that
change with the level of output.
total welfare The sum of consumer surplus and pro-
ducer surplus.
trade-offs The reality of scarce resources implies that
individuals, firms, and governments are constantly
faced with difficult choices that involve benefits
and costs.
unit elastic demand Ed=1. The percentage change
in price is equal to percentage change in quantity
demanded.
utility Happiness, or benefit, or satisfaction, or
enjoyment gained from consumption of goods and
services.
utility maximizing rule The consumer chooses
amounts of goods X and Y, with their limited
income, so that the marginal utility per dollar spent
is equal for both goods.
utils A hypothetical unit of measurement often used
to quantify utility; aka “happy points.”
variable inputs Production inputs that the firm can
adjust in the short run to meet changes in demand
for the firm’s output.
world price The global equilibrium price of a good
when nations engage in trade.Glossary ‹ 217