ATC = Total Cost (TC) ÷ Output

The total costs incurred by the business in the current period per unit of output.

The fixed costs incurred by the business in the current period per unit of output.

Calculated as:

AFC = Total Fixed Costs ÷ Output

The level of output or total product produced by a business per unit of input used

Calculated as:

 APP = Output

The level of revenue earned per unit of output

Calculated as:

AR = Revenue ÷ Output

The business would be able to to meet both its fixed and variable costs of production with the revenue it recieved during the current period.

MC (Marginal Cost) = MR (Marginal Revenue) = ATC (Average Total Costs)

As sucessive units of a variable input are added to a production process with the other inputs held constant, the marginal physical product (MPP) decreases.

The reason why the supply function is upward slopping.

The change in total costs of production as the output or total product of the business is expanded.

Calculated as:

MC = Δcost ÷ Δoutput

represents the total cost of producing another unit of output

the change in the cost of a resource used in production as more of this resource is employed

i.e. The marginal input cost of fertilizer is the price of fertilizer in the market place

the change in output or total product the business would achieve in the current period by expanding the use of an input by another unit

Calculated for labor as:

Δoutput ÷ Δlabor

the change in revenue earned

Calculated as:

Δrevenue ÷ Δoutput

Marginal Value Product (MVP)

the change in revenue earned by a business as it employs an additional unit of a resource, holding other resource use constant.

Calculated as:

Marginal Physical Product (MPP) x market price of a product

Market stucture characterized by the following:

• Large number of producers
• Homogeneous product
• Perfect information
• No barriers to entry or exit

sum of all individual catagories of production costs during the current period.

Calculated as:

Total Variable Costs (TVC) + Total Fixed Costs (TFC)

sum of all current production costs that do not vary with the level of output or input use.

Calculated by adding up all individual fixed costs.

The total output of goods or services produced by the firm during the current period.

i.e., total wheat produced by a wheat producer

Total Revenue (TR)

sum of all money recieved by the business from the sell of the products it markets during the current period

Calculated as:

(P_corn x Q_corn) + (P_wheat x Q_wheat)

sum of all individual catagories of production costs that do vary with the level of output or input use.

Calculated by adding up all individual variable costs

level of specific current production costs that do vary with the level of output or input use.

Calculated by multiplying price of input by quanity used

This line reflects the particular level of expenditures for two inputs.

The slope is the ratio of the prices of the two inputs

the rate of substitution or trade-off between two inputs in the production of a specific product.

Also represents the slope of an isquant curve.