shows the relationship between the average product and the quantity of an input.

the variable cost per unit of output.

shows how total cost depends on the quantity of output.

the additional quantity of output produced by using one more unit of an input.

protects a monopolist (and allows it to persist and earn economic profits) by preventing other firms from entering the industry.

when an increase in the quantity of that input, holding the levels of all other inputs fixed, leads to a decline in the marginal product of that input.

a market in which all market participants are price-takers.

an economic profit equal to zero; an economic profit just high enough to keep a firm engaged in its current activity.

shows the relationship between output and average total cost when fixed cost has been chosen to minimize average total cost for each level of output.

a cost that has already been incurred and is nonrecoverable; should be ignored in a decision about future actions.

when new firms can easily enter into the industry and existing firms can easily leave the industry.

falls at low levels of output and then rises at higher levels.

the sum of the fixed cost and the variable cost of producing a given quantity of output.

says that profit is maximized by producing the quantity of output at which the marginal revenue of the last unit produced is equal to its marginal cost.

an industry controlled by a monopolist.

when output increases directly in proportion to an increase in all inputs.

the fixed cost per unit of output.

describes a good when consumers regard the products of different firms as the same good.

the change in total revenue generated by an additional unit of output.

an industry in which firms are price-takers.

when long-run average total cost increases as output increases.

a business’s total revenue minus the opportunity cost of its resources; usually less than the accounting profit.

when economies of scale provide a large cost advantage to a single firm that produces all of an industry’s output.

(HHI) is the square of each firm’s share of market sales summed over the industry. It gives a picture of the industry market structure.

firms calculate for the purposes of taxes and public reporting, is often considerably larger than economic profit because it includes only explicit costs and depreciation, not implicit costs.

an input whose quantity the firm can vary at any time.

the only producer of a good that has no close substitutes.

a cost that involves actually laying out money.

a cost that does not depend on the quantity of output produced; the cost of the fixed input.

an industry with only a small number of firms.

an input whose quantity is fixed for a period of time and cannot be varied.

the quantity of output at which average total cost is lowest—it corresponds to the bottom of the U-shaped average total cost curve.

gives the creator of a literary or artistic work the sole right to profit from that work for a specified period of time.

the fraction of the total industry output accounted for by a firm’s output.

a consumer whose actions have no effect on the market price of the good or service he or she buys.

a cost that does not require an outlay of money; it is measured by the value, in dollar terms, of benefits that are foregone.

a producer in an oligopoly.

a market structure in which there are many competing firms in an industry, each firm sells a differentiated product, and there is free entry into and exit from the industry in the long run.

measure the percentage of industry sales accounted for by the “X” largest firms, for example the four-firm concentration ratio or the eight-firm concentration ratio.

when long-run average total cost declines as output increases.

the opportunity cost of the capital used by a business—the income the owner could have realized from that capital if it had been used in its next best alternative way.

a firm whose actions have no effect on the market price of the good or service it sells.

shows how marginal revenue varies as output varies.

the relationship between the quantity of inputs a firm uses and the quantity of output it produces.

is a product that consumers regard as the same good even when it comes from different firms.

when no one firm has a monopoly, but producers nonetheless realize that they can affect market prices.

shows how the quantity of output depends on the quantity of the variable input, for a given quantity of the fixed input.

total cost divided by quantity of output produced.

the total product divided by the quantity of an input.

when output increases less than in proportion to an increase in all inputs.

says that every activity should continue until marginal benefit equals marginal cost.

total cost divided by quantity of output produced.

shows how the cost of producing one more unit depends on the quantity that has already been produced.

the time period in which at least one input is fixed.

gives an inventor a temporary monopoly in the use or sale of an invention.

the time period in which all inputs can be varied.

when output increases more than in proportion to an increase in all inputs; for example, doubling all inputs would cause output to more than double.

a cost that depends on the quantity of output produced. It is the cost of the variable input.