Cost/Curves
When MC < ATC, ATC does this
What is decreases
In the short run, at least one of these is fixed
What is an input
What happens to supply if firms earn positive profit in the short run
What is firm shifting supply to the right
When a firm produces more and its average cost per unit drops, what do we call this
What are economies of scale
Profit
When total revenue is greater than total cost, a firm is in what situation
What is AFC
The vertical distance between ATC and AVC
What do we call the curve that shows a firm’s lowest possible cost for every output level when it can change all of its inputs?
What is LRATC
What is a normal profit
A firm earning zero economic profit is earning this in accounting terms
As a business grows, workers and inputs can become more specialized and efficient. This type of cost advantage goes by what name
What is specialization
If a firm is losing money but still covering all of its variable costs, what should it do in the short run
Keep producing
The point where MC = ATC
What is the minimum of ATC
When long run ATC rises as output increases
What are diseconomies of scale
A firm produces where price equals this average curve only in break even
What is ATC
What are constant returns to scale
A firm increases output but its long run average cost stays exactly the same, what kind of scale situation is it in
The price at which a firm earns zero economic profit, covering both explicit and implicit costs, is known as what point?
Break even point
What curve occurs when the cost curve falls quickly at first bc variable inputs become more efficient, but eventually rises after diminishing returns occur.
What is the marginal cost (MC) curve
What is "long run"
When a firm can change all inputs, it is operating in this period
If price is between AVC and ATC, the firm does this
What is produce in the short run but take a loss
When a company becomes too big and starts dealing with communication problems and higher coordination costs, it’s experiencing what?
What are diseconomies of scale
When price falls below this specific cost curve, the firm must shut down immediately in the short run. Which curve is it?
Minimum of AVC
What is the minimum efficient scale
What is the point where a firm can produce at the lowest possible cost per unit in the long run
What do we call it when a firm’s long run average cost stays the same even as it increases the scale of production
What are constant returns to scale
MR = MC also equals this condition under perfect competition
What is P = MC
On the long run ATC curve, what’s the name of the output level where a firm hits its lowest possible average cost and is operating at peak productive efficiency
Minimum efficient scale (MES)
Shutdown point
At the price where a firm covers all of its variable costs but none of its fixed costs, it’s operating at shutdown point