Formulas
The formula for total cost.
What is FC+VC?
Output is increasing at a faster rate than all inputs.
What is increasing RTS?
Inputs that can be changed in the short run to change production.
What are variable inputs?
TP is increasing at an increasing rate.
What is MP is increasing?
"Per-Unit" measurements.
What is Marginal and Average?
The formula for marginal cost.
What is changeTC/changeQ?
Long-run ATC decreases as output increases.
What is the economics of scale?
A firm's maximum potential level of production.
What is plant capacity?
TP is increasing at a decreasing rate.
What is MP is positive but decreasing?
If they are earning a loss, this is a consideration they face in determining whether they should stay open or not.
What is during the short run?
The formula for average fixed cost.
What is FC/Q?
Output is increasing at a slower rate than all inputs.
What is decreasing RTS?
The period during which there are fixed inputs and is too short for a firm to alter its plant capacity.
What is the short run?
TP is at a maximum.
What is MP is zero?
Other firms will enter that market because there are profit opportunities.
What is firms earning economic profit?
The formula for average variable cost.
What is VC/Q?
Long-run ATC increases as output increases.
What is the diseconomics of scale?
Inputs that cannot be changed in the short run to change production.
What are fixed inputs?
TP is decreasing.
What is MP is negative?
If a firm is earning a loss it will simply exit the market or industry.
What is during the long run?
The formula for total cost.
What is TC/Q?
Output is increasing at the same rate as all inputs.
What is constant RTS?
The way a firm combines inputs to produce an output.
What is the production function?
AP is rising.
What is MP is above AP?
It is cheaper to shut down.
When TR<VC<TC shut down temporarily?