What is Total Physical Product (TPP)?
the amount of output prod when increasing amounts pf a variqble factor are used with a constant amount of the fixed factor
What are Total Fixed Costs (TFC)?
Costs that do not vary as output varies
What are a total Variable Costs (TVC)?
Costs that do vary as output changes
What is Total Costs (TC)?
TFC + TVC
What is Average Total Cost (ATC)?
TC/Q
What is marginal cost?
Change in TC/ change in Q
What is Average Variable Cost?
TVC/Q
What are the sources of EOS?
Specialisation & division of labour
Masses resources
Indivisibilities
When should a company shutdown?
If AR> AVC the form makes a loss but is better off producing as the cost of production is being met
If AVC> AR the firm should shutdown as the loss is minimised and = TFC
Minimum efficiency scale
Is the lowest point on the LRAC curve which a business achieves productive efficiency
What is allocative efficiency?
P=MC
This is the price consumers are willing to pay is equivalent to the marginal utility they get