ECON1101 - Profit Maximising Rule
Marginal Analysis
The process of identifying benefits and costs of various alternatives by examining the incremental effect on the total cost/revenue of a one-unit change in the input/output of each alternative.

Marginal Analysis is used to maximize profit, by finding the point where the Marginal Costs are equal to the Marginal Revenue.

Short Run

Firms either operate at an economic loss, a normal profit, or an economic profit.

The three types of profits can be read more about here.

Short Run Supply Curve is the portion of the MC curve above the AVC curve

580px-Perfect_competition_in_the_short_run_%28simple%29.svg.png

Long Run

If the firm is selling at less than the average variable cost for all prices and quantities then it should leave the market.

Long Run Supply Curves are made of lots of smaller Short Run Curves

The Long Run Average Cost Curve
Relationship between the lowest attainable Average Total Cost and the output when both Plant Size and Labor are varied.