ECON_3211_Notes_10-28-24

Marginal Product (MP)

The additional output produced by adding one more unit of labor.

Perfect Competition

A market structure where firms are price takers and have no control over the market price.

Total Cost (TC)

The overall cost of production, which includes total fixed cost (TFC) and total variable cost (TVC).

Total Fixed Cost (TFC)

Costs that do not vary with the level of production, such as rent.

Total Variable Cost (TVC)

Costs that vary with the level of production, such as labor costs.

Average Total Cost (ATC)

Total cost per unit of output; U-shaped graphically.

Average Variable Cost (AVC)

Variable cost per unit of output; typically U-shaped but merges with ATC as output increases.

Marginal Cost (MC)

The additional cost of producing one more unit of output.

Profit Maximization

Occurs when marginal revenue (MR) equals marginal cost (MC); firms maximize profit by adjusting output.

Price Taker

A firm that must accept the market price as given and cannot influence it.

Linear Revenue Curve

A straight-line graph representing total revenue; indicates constant price per unit sold.