7 SR Cost Curves
Categorize the cost term with Totals and Q output.
=Sum of TFC and TVC
=TC/ATC
Is related to things such as labor.
=Q*AVC
Stands for Total Cost
=All Costs at a given output.
=TVC/AVC
Stands for Total Fixed Cost
=Q*AFC
=Q*ATC
=All costs of these type DO NOT change.
=TFC+TVC
=TFC/AFC
Is constant
Stands for Total Variable Cost
Is a subcomponent of TC that increases as Q increases.
TFC
TVC
TC
Qoutput
Categorize the Average Cost Terms and Marginal Cost
=Fixed Cost PER UNIT OF OUTPUT
=Δ TVC / Δ Q
Stands for Marginal Cost
ALWAYS falls as Q rises.
Stands for Average Total Cost
=TFC / Q
=TC/Q
=Sum of two average costs that first falls then rises.
=Change in the firm's TC when it produces another unit of output.
=Total Cost PER UNIT OF OUTPUT.
Stands for Average Variable Cost
=Change in TVC from an extra unit of output.
=TVC / Q
Stands for Average Fixed Cost
=AFC+AVC
=Variable Cost PER UNIT OF OUTPUT
Is a subcomponent of ATC that first falls then rises.
=ATC-AFC
=Δ TC / Δ Q
=ATC-AVC
AFC
AVC
ATC
MC