6 supply: costs, economies of scale and the supply curve. Economic (productive) efficiency: a situation in which a producer cannot produce more without increasing cost. Economic profit: total revenue minus total cost and distinct from normal profit. Economies of scale: the condition under which long-run average cost decreases as output increases. Fixed cost: a cost of production that does not vary with the level of output. Normal profit: the return a firm receives from inputs such as a director"s role in organizaing and running the business. This is part of the firm"s opportunity cost. Producer surplus: the difference betweent the amount the producer receives from the sale of a good and the lowest amount that producer is willing to accept for that good. Scale effiency: a situation where the provider is producing at an output level such that average is minimized. Variable cost: a cost of production that varies directly with the level of output.