Micro Unit 3
The market can be classified as Long-Run and Short-Run.
In Short-Run some resources are Fixed Resources. While in Long-Run, all of the resources are Variable Resources.
There are different kinds of cost when a firm producing a product:
- Fixed Costs
- Variable Costs
- Total Costs
- Average Fixed Costs (AFC)
- Average Variable Cost (AVC)
- Average Total Cost (ATC)
- Marginal Cost (MC)
There are two kinds of Efficiency:
Productive Efficiency, which is price equals the minimum ATC.
Allocative Efficiency, which is price equals marginal cost.
