short run cost curve

this represents all the inputs cost that are fixed in the short run

this represents all the inputs that can be varied in order to change the firm's level of output

these are costs that existing firms have already incurred and cannot be recovereed. (e.g a firm invested in a unique software specific to their producton technology, they can never get back that money cause it can't be resold.)

these cost refer to the value of inputs in their next best use, and are more relevant to economic decisions than accounting costs.

SAC = (STC/Q). SAC = (SFC/Q) + (SVC/Q) SAC = SAFC +SAVC. Hence the short run average cost are equal to the short run fixed costs (which decrease with output) plus the SR average variable cost.

SMC = change in SVC/change in Q. SMC = change in STC/ change in Q. Short run marginal cost are the extra costs of producing one mroe unit of output in the Short run.

suppose the market price P, and since the firm is a price taker MR = P. Profit maximization implies that the firm should supply Q amount because at this level output SMC is equal to P.

represents how much a firm will produce at various output price levels in the short-run. It consists of the positively sloped segment of the SMC above the point of minimum average variable costs. below this price the firm's optimal strategy is to shut down. the market supply curve in the short run is simply the sum of the individual SR supply curves as defined above.