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Individual Supply Curve in the Short Run and Long Run definitions

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  • Short-Run Supply Curve
    Portion of the marginal cost curve above minimum average variable cost, indicating output levels when price exceeds variable expenses.
  • Long-Run Supply Curve
    Segment of the marginal cost curve above minimum average total cost, representing output when price covers all production costs.
  • Marginal Cost Curve
    Graph showing the additional cost of producing one more unit, crucial for determining supply decisions in both time frames.
  • Average Variable Cost
    Per-unit measure of variable expenses, serving as the threshold for production decisions in the short run.
  • Average Total Cost
    Per-unit measure of all production expenses, acting as the benchmark for long-run market participation.
  • Shutdown Point
    Lowest price at which production covers variable expenses; below this, output drops to zero in the short run.
  • Exit Point
    Lowest price at which all costs are covered; below this, firms leave the market in the long run.
  • Perfect Competition
    Market structure where many firms sell identical products, leading to price-taking behavior and supply curves based on cost thresholds.
  • Profit
    Difference between total revenue and total cost, positive only when price exceeds average total cost.
  • Quantity Supplied
    Amount of output a firm offers at a given price, determined by where marginal revenue equals marginal cost.
  • Cost Curves
    Graphs depicting relationships among various production expenses, essential for supply and shutdown decisions.
  • Marginal Revenue
    Additional income from selling one more unit, equated with marginal cost to determine optimal output.
  • Production Decision
    Choice to produce or not, based on whether price covers variable or total costs in different time frames.
  • Market Exit
    Action taken when price fails to cover all costs in the long run, resulting in zero output.
  • U-Shaped Curve
    Characteristic shape of cost curves, reflecting how costs per unit change with output and influencing supply thresholds.