Short-run average total cost (SRATC) represents the average cost per unit of output in the short run, when at least one factor of production is fixed. It typically demonstrates a U-shaped curve due to initially increasing and then decreasing returns to the variable factors of production as output changes.

Short-run Average Total Cost

Average cost per unit of output

In economics, the short run is a period during which at least one factor of production is fixed, limiting the ability to adjust all inputs fully. This concept helps in analyzing how firms respond to changes in demand or price with limited flexibility in production adjustments.

Short Run

Factors of production are the essential inputs required to produce goods and services, typically categorized into land, labor, capital, and entrepreneurship. Understanding these factors is crucial for analyzing economic productivity and the allocation of resources in an economy.

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