ECON 1050 Chapter Notes - Chapter 12: Variable Cost, Average Variable Cost, Social Cost

• School: University of Guelph
• Department: Economics
• Course: ECON 1050
• Professor: Pat Martin

Document Summary

Many firms sell identical products to many buyers. There are no restrictions on entry into the market. Established firms have no advantage over new ones. Sellers and buyers are well informed about prices. If the minimum efficient scale of a single producer is small relative to the market demand for the good or service. Minimum efficient scale: is the smallest output at which long-run average reaches its lowest level. Firms produce a good with no unique characteristics. A firm that cannot influence the market price because its production is an insignificant part of the total market. Firm"s goal: maximize economic profit (total revenue - total cost) Total revenue: = price of output * number of units of output sold (p x q) Marginal revenue: change in total revenue that results from a one-unit increase in the quantity sold (dividing the change in total revenue by the change in quantity sold)