Micro Final

Total Cost formula

TFC + TVC

Average Fixed Cost formula

TFC / Q

Average Variable Cost formula

TVC / Q

Average Total Cost formula

TC / Q

Marginal Cost formula

Change in TC / Change in Q

Short Term shut-down point

When price is below minimum AVC.

Long Term shut down point (break even point)

Where price = minimum ATC (zero profit)

Profit maximizing rule

Price = MC (marginal cost)

Long-Run equilibrium point

Where price = minimum ATC

productive efficiency

firms are producing at the lowest possible cost (minimum ATC)

Allocative efficiency

Where products are produced at the cost that consumers value it (P = MC)

Profit formula

(P-ATC) * Q