After reading this chapter, you should be able to

11.1 Describe and explain the concept of economic profits and sunk costs.

11.2 Describe and explain the concept of diminishing marginal product.

11.3 Describe and explain the difference between the short run and the long run.

11.4 Describe and explain the short-run costs of the firm and how they vary with the output levels that are produced.

11.5 Describe and explain how the firm uses the long-run average cost curve in its planning.