Formulas
FC+VC
What is the total cost formula?
Some costs are fixed and some costs are variable
What is short run production costs?
Q
What is quantity?
Provides incentives for firms to innovate, cut costs, and engage in behavior that uses society's resources effieciently
What is profit?
TP increasing at an increasing rate
What happens when MP is increasing?
PᐧQ
What is the total revenue formula?
All costs are variable
What is long run production costs?
P
What is price?
Money spent on all materials, utilities, rent, capital, etc.
What is explicit cost?
AP is rising
What happens while MP is above AP?
FC/Q
What is the average fixed cost formula?
Firms can facilitate a plant capacity alterations
What is long run production?
△
What is “change in?”
Money value of one's opportunity cost
What is implicit cost?
AP is falling
What is happening while MP is below AP?
TC/Q
What is the average total cost formula?
What is short run production?
VC
What is variable cost?
Money left after all costs are subtracted from revenue
What is economic profit?
TP decreases
What happens when MP is negative
TP/L
What is the average product formula?
Reflects economies and diseconomies of scale
What is the long run production curve?
FC
What is fixed cost?
Money left after only explicit costs are subtracted from total revenue
What is accounting profit?
TP increases at a decreasing rate
What happens when MP is positive but decreasing?