ECON 101 Chapter Notes - Chapter 11: Marginal Product, Production Function, Diminishing Returns
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ECON 101 Full Course Notes
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Minimum average cost: for the u-shaped average total cost curve, average total cost is at its minimum at the bottom of the u, minimum-cost output: the quantity of output at which average total cost is lowest. I(cid:374) the lo(cid:374)g ru(cid:374), a fir(cid:373)"s fi(cid:454)ed (cid:272)ost (cid:271)e(cid:272)o(cid:373)es a (cid:448)aria(cid:271)le it (cid:272)a(cid:374) (cid:272)hoose to produce: acquiring new machinery costs, firm will have to either rent or buy additional equipment, higher fixed cost in the short run. In the long run, when a producer has had the time to choose the fixed cost appropriate for its desired level of output, that producer will be at some point on the long-run average total cost curve. If the output level is altered, the firm will no longer be on its long-run average total cost curve and it will instead be moving along its current short-run average total cost curve.