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
