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### 48 Cards in this Set

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 The amount a firm recieves for the sale of it's products total revenue (TR) the market value of the inputs a firm uses in production total cost (TC) Profit= TR-TC the increase in the quantity of output obtained from one additional unit of that input marginal product (MP) the _____ _____ is upward sloping, meaning ________. production function; meaning that output increases as input increases. the output increases at a decreasing rate. or in other words, the marginal product (MP) of input decreases as output increases. diminishing marginal product graphs the quantity produced on the horizontal axis & total cost on the vertitcal axis total cost curve costs that do not vary with the quantity of output produced, such as the cost to build a factory fixed costs costs that change as the firm alters the quantity of output produced, such as labor cost. variable costs total cost (TS)= fixed cost + variable cost marginal cost (MC)= CHANGE in TC/CHANGE in Q rising MC curve reflects.. diminishing marginal product the average total cost (ATC) curve has a __ shape. U ATC=TC/Q= (FC+VC)/Q=AFC+AVC the ATC curve first declines because the falling AFC curve dominates the AVC later, ATC rises because the rising AVC dominates the AFC whenever MC is less that ATC, ATC is falling whenever MC is greater than ATC, ATC is rising MC curve crosses the ATC curve at it's minimum the long-run ATC curve is much _____ U-shape than the short-run ATC flatter all the short-run curves lie ___ or ___ the long-run curve. why? on or above; because firms have more flexibility in long-run when long-run ATC declines, as output increases, there is said to be economics of scales when long-run ATC rises as output increases, there is said to be diseconomics of scales when long-run ATC does not change as output increases, there is said to be constant returns to scale average revenue (AR) TR/Q marginal revenue (MR) CHANGE in TR/CHANGE in Q=P (only in competitive relationships) at Q*MR= MC (holds true for all firms including those in a non-competitive market) at Q*MR=MC= P (only for competitive market firms) rational decision makers think at margin. the supply curve of a competitive firm is givem by a portion of its MC curve in short run, a firm shuts down if TRATC the process of entry & exit only ends when price & ATC are driven to equality