The SHORT RUN

the period of time in which at lease one factor of production is fixed. all production takes place during this period of time.

the short run

total cost

the total costs of producing a certain level of output; fixed cost plus variable cost

total product

the total output that a firm produces using its fixed and variable factors in a given time period

average revenue

total revenue received divided by the number of units sold, price is equal to it.

the time it takes to increase the quantity of the fixed factor

what determines the length of the short run

it rises at first and then decreases

what does total product do with input

at its highest point

where does marginal product intersect average product?

at the fixed cost

where does total cost start

at the origin

where does variable cost start?

labor

In a teddy bear producing firm, what are the variable factors?

total revenue

the aggregate revenue gained by a firm from the sale of a particular quantity of output (price times quantity sold)

marginal product

the extra output that is produced by using one more unit of the variable factor

marginal revenue

the extra revenue gained from selling one more unit of a good or service

as extra units of a variable factor are added to a given quantity of a fixed factor, the output per unit of the variable factor will eventually diminish

the law of diminishing average returns

as extra units of a variable factor are added to a given of a fixed factor ,the output from each additional unit of the variable factor will eventually diminish.

the law of diminishing marginal returns

capacity output

the minimum pint of the ATC curve

variable costs

costs that vary with the level of output

cricket ball making, traditional and handmade object making

examples where short run is long

nuclear power plants, gardening firms, digging firms

examples where short run is short

fixed factors

factors of production that cannot be altered in the short run

variable factors

factors of productions that can be altered in the short run

some element of capital but it could also be a type of highly skilled labour

fixed factor

point of diminishing average returns

highest point on average product

increasing units of variable factors and fixed factors

how can a firm increase their output

offer over-time shifts to increase labor

how could the teddy bear firm respond to an increase in the demand for teddy bears?

long run

if the demand increase persists and the firm decides to expand the production unit and ring in more machinery and employ more people the time period is the...?

management, land, capital

in a teddy bear producing firm, what are the fixed factors

average cost

it is the average total cost of production per unit calculated by dividing the total cost by the quantity produced. it is equal to the average variable cost plus the average fixed cost.

point of diminishing marginal returns

marginal product's highest point

the period of time in which all factors of production are variable but the state of technology is fixed. all planning takes place in this period of time.

the long run

average product

the output that is produced, on average, by each unit of he variable factor

break even price

the price where average revenue is equal to average total cost. below this cost the firm will shut down in the long run

shut down price

the price where average revenue is equal to average variable cost. below this price the firm will shut down in the short run

decrease then increase

what do average total cost and average vairable cost do with output increase

rise with output at a decreasing rate then at an increasing rate

what do total cost and total variable cost do with output

rise then fall

what does average product and marginal product do at input increases

decreases then increases

what does marginal cost do with output increase

it decreases

what happens to average fixed cost as output rises

the short run

what time period is the firm in once the changes to the plant have taken place and the firm is producing again?

at their lowest points

when does marginal cost intersect the avc and the atc

fixed cost

costs that do not change with the level of output they will be the same for one or one thousand units (the cost of producing nothing)

no

does total fixed cost change with output?

marginal cost

it is the additional cost of producing one more unit of output