2.3 marginal costs and marginal returns

marginal cost is

the addition to total cost resulting from producing one additional unit of output

average fixed cost is

total cost of employing the fixed factors of production to produce a particular level of output, divided by the size of the output

average variable cost is

the total cost of employing the variable factors of production to produce a particular level of output, divided by the size of the output

average total cost is

total cost of producing at a particular level divided by the size of the output

marginal returns links to marginal costs since

when marginal returns is increasing, marginal costs is decreasing, when marginal returns begins to decrease, margin cost begins to rise

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long run marginal cost is

addition to total cost resulting from producing one additional unit of output when all the factors of production are variable

long run average cost is

total cost of producing a particular level of output divided by the size of output when all the factors of production are variable

total revenue is

all the money received by a firm from selling its total output

average revenue is

total revenue divided by output

marginal revenue is

the addition to total revenue resulting from the sale of one more unit of the product

a price taker is

a firm which is so small that it has to accept the ruling market price, if the firm raises its prices it loses all its sales and if it cuts it it gains no advantage

price maker is

when a firm faces a downward sloping demand curve for its product, it possesses the market power to set the price at which it sells the product

quantity setter is

when a firm faces a downward sloping demand curve for its product, it possesses the market power to set the quantity of good it wishes to sell