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SHORT-RUN PRODUCTION ALTERNATIVES: A firm faces three production options in the short run based on a comparison between price, average total cost, and average variable cost. If price is greater than average total cost, a firm earns an economic profit by producing the quantity that equates marginal revenue with marginal cost. If price is less than average total cost but greater than average variable cost, a firm incurs an economic loss, but produces the quantity that equates marginal revenue with marginal cost. If price is less than average variable cost, a firm shuts down production in the short run, incurring an economic loss equal to total fixed cost.
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RESOURCES Labor, capital, land, and entrepreneurship used by society to produce consumer satisfying goods and services. Resources are often given the more descriptive term factors of production.
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Al Capone's business card said he was a used furniture dealer.
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"Intense concentration hour after hour can bring out resources in people they didn't know they had. " -- Edwin Land, inventor, entrepreneur
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Wage
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