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LONG-RUN MARGINAL COST: The change in the long-run total cost of producing a good or service resulting from a change in the quantity of output produced. Like all marginals, long-run marginal cost is the increment in the corresponding total. What's most notable about long-run marginal cost, however, is that we are operating in the long run. Unlike the short run, in which at least one input is fixed, there are no fixed inputs in the long run. As such, there is only variable cost. This means that long-run marginal cost is the result of changes in the cost of all inputs.
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Lesson Contents
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Unit 1: The Basics |
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Unit 2: Three Totals |
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Unit 3: Four More Measures |
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Unit 4: Long-Run Cost |
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Unit 5: Previewing Supply | |
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Cost
- The first unit of this lesson, The Basics, begins this our study with a review of the opportunity cost notion and how it relates to business activity.
- In the second unit, Three Totals, we take a look at the three total cost measures, including total cost, total variable cost, and total fixed cost.
- The third unit, Four More Measures, then presents four additional cost measures -- average total cost, average variable cost, average fixed cost, and marginal cost.
- In the fourth unit, Long-Run Cost, we examine how scale economies and diseconomies affect cost in the long run.
- The fifth and final unit, Previewing Supply, then closes this lesson by previewing the importance of cost, especially marginal cost, to the supply decision by a firm.
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MARKET-CLEARING PRICE The price that exists when a market is clear of shortage and surplus, or is in equilibrium. Market-clearing price is a common, non-technical term for equilibrium price. In a market graph, the market-clearing price is found at the intersection of the demand curve and the supply curve.
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GRAY SKITTERY
[What's This?]
Today, you are likely to spend a great deal of time at a flea market hoping to buy either an ink cartridge for your printer or a rechargeable battery for your camera. Be on the lookout for the happiest person in the room.
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This isn't me! What am I?
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Experience keeps a dear school, but fools will learn in no other. " -- Benjamin Franklin
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G-10
Group of Ten
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