The recent long look X-ray observations of TeV blazars have revealed many
important new features concerning their time variability. In this paper, we
suggest a physical interpretation for those features based on the framework of
the internal and external shock scenarios. We present a simplified model
applicable to TeV blazars, and investigate through simulations how each of the
model parameters would affect to the observed light curve or spectrum. In
particular, we show that the internal shock scenario naturally leads to all the
observed variability properties including the structure function, but for it to
be applicable, the fractional fluctuation of the initial bulk Lorentz factors
must be small, with sigma_gamma / gamma_average < 0.01. This implies very low
dynamical efficiency of the internal shock scenario. We also suggest that
several observational quantities -- such as the characteristic time scale, the
relative amplitude of flares as compared to the steady (``offset'') component,
and the slope of the structure function -- can be used to probe the inner jet.
The results are applied to the TeV blazar Mrk421, and this, within the context
of the model, leads to the determination of several physical parameters: the
ejection of a shell with average thickness of ~1E13 cm occurs on average every
10 minutes, and the shells collide ~1E17 cm away from the central source.Comment: 12 pages, 13 figures, to appear in Ap