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Micro 3.2-Cost Terms-Video Choice and Cost Sort

Last updated 7 months ago

2 questions

Note from the author:

7 SR Cost Curves

1

1

Question 1

1.

Question 2

2.

Categorize the cost term with Totals and Q output.

Is a subcomponent of TC that increases as Q increases.

=Sum of TFC and TVC

Stands for Total Variable Cost

Is related to things such as labor.

=TFC/AFC

=All costs of these type DO NOT change.

=All Costs at a given output.

=TC/ATC

Stands for Total Fixed Cost

=TFC+TVC

=Q*AVC

=TVC/AVC

Stands for Total Cost

=Q*AFC

Is constant

=Q*ATC

TFC

TVC

TC

Qoutput

Categorize the Average Cost Terms and Marginal Cost

Is a subcomponent of ATC that first falls then rises.

Stands for Average Fixed Cost

=Sum of two average costs that first falls then rises.

=AFC+AVC

=TC/Q

=Change in the firm's TC when it produces another unit of output.

Stands for Marginal Cost

=Δ TVC / Δ Q

=Δ TC / Δ Q

Stands for Average Variable Cost

=TFC / Q

=Fixed Cost PER UNIT OF OUTPUT

=TVC / Q

=Total Cost PER UNIT OF OUTPUT.

Stands for Average Total Cost

=Change in TVC from an extra unit of output.

ALWAYS falls as Q rises.

=ATC-AFC

=ATC-AVC

=Variable Cost PER UNIT OF OUTPUT

AFC

AVC

ATC

MC