Term
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Definition
| any cost that does not depend on the firm's level of output; costs are incurred even if nothing is being produced. there are no fixed costs in the long run. |
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Term
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Definition
| a cost that depends on the level of production chosen. |
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Term
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Definition
| fixed costs + variable costs. |
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Term
| total fixed costs (TFC) or overhead |
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Definition
| total of all costs that do not change with output, even if output is zero |
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Term
| average fixed costs (AFC) |
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Definition
TFC / # of units of output
a per unit measure of fixed costs |
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Term
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Definition
| the process of dividing TFC by more units of output. AFC declines as Q rises |
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Term
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Definition
| the total of all costs that vary with output in the short run |
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Term
| total variable cost curve |
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Definition
| graph that shows the relationship between total varaible cost and the level of a firm's output |
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Term
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Definition
| the increase in total cost that results from producing 1 more unit of output. marginal costs reflect changes in variable costs |
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Term
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Definition
| the increase in total cost that results from producing one more unit of output. marginal costs reflect changes in variable costs. |
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Term
| average variable cost (AVC) |
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Definition
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Term
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Definition
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Term
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Definition
| total amount that a firm takes in from the sale of its product: price per unit (p) times the quantiy of output the firm decides to produce (q) |
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Term
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Definition
| additional revenue that a firm takes in when it increases output by one additional unit. in perfect competition, P = MR |
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Term
| profix-maximizing level of output for all firms |
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Definition
| marginal revenue = marginal costs |
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Term
| profit-maximizing level of output for perfectly competitive firms |
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Definition
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