The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm.Figure 8.3
-The difference between average total cost and average variable cost decreases with an increase in output.
Definitions:
Demand Curve
A graph showing the relationship between the price of a good and the quantity of the good that consumers are willing and able to purchase at each price.
Perfectly Elastic
Refers to a situation in which the quantity demanded or supplied changes infinitely in response to any change in price.
Less Than Price
A situation where the selling price of a good or service is below its cost or perceived value.
Marginal Revenue
The extra revenue generated by selling an additional unit of a product or service.
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