Short-Run
What does short-run refer too?
It refers to a period where at least one input is fixed.
What is a variable in long-run?
All factors of production and costs
What is the formula for marginal cost?
Change of total cost/change of quantity
What is increasing returns to scale?
Output is increasing at a faster rate than all inputs
What types of firms does the maximization profit apply to?
All firms
What is variable cost?
A cost that changes as output changes.
What is long-run?
All inputs can be altered no inputs are fixed plant capacity can be altered, all costs are variables
What is marginal cost?
What is decreasing returns to scale?
Output is increasing at a slower rate than all inputs
What rule minimizes loss?
MR=MC rule
What is total cost?
The sum of fixed and variable costs.
What does the long-run average total cost curve look like?
A smiley face
What does marginal cost depend on?
Marginal production.
What is constant returns to scale?
Output is increasing at the same rate as all inputs
How does a firm earn a economic profit?
When TR>TC
What is fixed cost?
What is economics of scale?
What is specialization?
When mc decreases initially.
What is constant returns to scale also known as?
Efficient scale
How does a firm break even?
When TR=TC
What does your change of total fixed cost divided by change of quantity find?
Marginal cost.
What is diseconomies of scale?
Long-run ATC increases as output increases
What is diminishing returns?
When mc eventually rises.
What is minimum efficient scale?
helps determine the number of firms in a market
How does a firm earn economic loss?
When TR<TC