Short Run Firms Flashcards
Total variable cost curve
A graph that shows the relationship between total variable cost and. The level of a firm’s output
Marginal cost
The increase in total cost that results from producing 1 more unit of output. Marginal costs reflect changes in variable costs.
What are firms constrained by in the short run?
some fixed input that (1) leads to diminishing returns and (2) limits its capacity to produce.
Total cost
Total variable cost + total fixed cost
Perfect competition
An industry structure in which there are many firms that are all small and produce identical products. New competitors can enter and exit.
Homogenous products
Undifferentiated products, products that are identical to or indistinguishable from each other
Profit-maximizing level of output
Point at which price per unit is equal to marginal cost per unit
