Production and Costs
What is the formula for total cost?
Total Cost = Fixed Cost + Variable Cost
The point at which a firm maximizes profit?
What is MR=MC
What is the main difference between the short run and the long run?
In the short run, at least one input is fixed; in the long run, all inputs are variable.
what is marginal cost.
Marginal cost is the additional cost incurred from producing one more unit of a good.
the area between price and average total cost (ATC) represent on a graph
what is
Economic profit or loss.
What causes a firm to exit an industry in the long run?
Consistent economic losses over time.
What happens to average total cost (ATC) when marginal cost (MC) is below it?
When MC is below ATC, ATC decreases.
What is the difference between accounting profit and economic profit?
Accounting profit excludes implicit costs, while economic profit includes them.
Marginal Revenue
Average Revenue
Demand
Explain economies of scale.
Economies of scale occur when increasing production leads to a lower average total cost.
What happens to profit in the long run for perfectly competitive firms?
Firms earn zero economic profit due to free entry and exit.
The demand curve for a firm in a perfectly competitive firm
what is perfectly elastic?
What is the difference between explicit and implicit costs?
Explicit costs are direct payments made by a firm, while implicit costs represent the opportunity costs of using resources owned by the firm.
The shut down rule
what is P < AVC?
If many firms are losing money, what will happen in the long run?
firms will enter the market