ECON 3211 Notes 11-01-24
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10 Terms
Profit-Maximizing Condition
The condition where a firm maximizes profit occurs when marginal revenue (MR) equals marginal cost (MC).
Shutdown Point
The point at which a firm is indifferent about staying in business; occurs when price (P) equals average variable cost (AVC).
Total Revenue (TR)
The total amount of money a firm earns from sales of its products.
Average Total Cost (ATC)
The total cost per unit of output, calculated by dividing total costs by the quantity produced.
Fixed Costs
Costs that do not change with the quantity of output produced, such as rent.
Average Variable Cost (AVC)
The variable cost per unit of output, calculated by dividing total variable costs by the quantity produced.
Marginal Cost (MC)
The additional cost incurred from producing one more unit of a product.
Indifference Point
The situation in which a firm is equally inclined to continue operations or exit, based on covering costs.
Perfect Competition
A market structure characterized by a large number of firms, product homogeneity, and easy entry and exit.
Supply Curve for Firm in Perfect Competition
The supply curve for a firm in a perfectly competitive market is derived from the portion of the marginal cost curve that is above the average variable cost curve.