Read definitions first, follow the mechanism, then use the diagram and judgement. The rapid recap gives the essential relationship; the reference indexes locate the fuller explanation.
Marginal and average: Marginal means the change from an additional unit; average means the total divided by the number of units.
Normal profit: The return needed to keep enterprise or capital in its current use. It is included in economic cost.
Economic and accounting profit: Economic profit deducts explicit and implicit opportunity costs. Accounting profit generally deducts recorded explicit costs.
Short run and long run: In the short run at least one factor is fixed; in the long run all factors can vary. These are not fixed calendar lengths.
Fixed and sunk cost: A fixed cost does not vary with current output; a sunk cost cannot be recovered. A fixed cost need not be sunk.
Derived demand: Demand for an input arising from demand for the output it helps produce.
Market power: Ability to influence a market price or other terms; distinguish selling power from buying power.
Static and dynamic: Static comparisons concern current allocation and costs; dynamic analysis considers change, investment and innovation over time.
How to use an economic claim
Identity: true by definition, such as TR = P × Q. It organises quantities but does not explain what caused them to change.
Model prediction: follows from stated assumptions. Identify the market structure, time horizon and what is held constant.
Contextual judgement: apply the mechanism to evidence, explain a condition that changes its strength, then reach a conclusion tied to the question.