marginal product (MP)
The change in total output that results from using one more unit of a
variable factor.
law of diminishing returns
The hypothesis that if increasing quantities of a variable factor are applied
to a given quantity of fixed factors, the marginal product of the variable
factor will eventually decrease.
total cost (TC)
The total cost of producing any given level of output; it can be divided
into total fixed cost and total variable cost.
total fixed cost (TFC)
All costs of production that do not vary with the level of output.
total variable cost (TVC)
Total costs of production that vary directly with the level of output.
average total cost (ATC)
Total cost of producing a given output divided by the number of units of
output; it can also be calculated as the sum of average fixed costs and
average variable costs. Also called unit cost or average cost.
average fixed cost (AFC)
Total fixed cost divided by the number of units of output.