Cost curve

A graph showing how a firm's cost, such as total, average, or marginal cost, varies with its level of output.

Total cost: The full expenditure required to produce a given quantity of output. It is the aggregate cost represented by a total-cost curve.
Economies of scale: A reduction in average cost as a firm's output increases. They explain downward-sloping long-run average-cost sections.
Profit maximization: The choice of output and inputs that yields the highest attainable profit. Comparing marginal cost with marginal revenue helps select a profit-maximizing output.
Revenue curve: A graph showing how a firm's revenue varies with its level of output. It plots income rather than the expenditure represented by a cost curve.
U-shaped cost curve: A curve that falls to a minimum and then rises as its horizontal variable increases. Average-cost curves often take this shape as scale economies give way to diseconomies.
Fixed cost: A production cost that does not change with output over a specified period. It sets the cost incurred even when output is zero.
Diseconomies of scale: An increase in average cost as a firm expands its scale of production. They can explain why long-run average cost eventually rises.
Break-even analysis: An assessment of the output or sales level at which revenue equals total cost. Total-cost and revenue curves locate the output where profit is zero.
Demand curve: A graph showing the quantity consumers are willing to buy at different prices. It describes buyers' choices, not a firm's production costs.
L-shaped cost curve: A curve that declines and then remains nearly flat as its horizontal variable increases. It represents persistent scale economies followed by little further change in average cost.

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