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Micro 3.2-Cost Terms-Video Choice and Cost Sort

Last updated 5 months ago

2 questions

Note from the author:

7 SR Cost Curves

1

1

Question 1

1.

Categorize the cost term with Totals and Q output.

Is a subcomponent of TC that increases as Q increases.
Stands for Total Cost
=All costs of these type DO NOT change.
=TVC/AVC
Stands for Total Fixed Cost
=TFC/AFC
Is constant
=All Costs at a given output.
=TC/ATC
=Q*ATC
Is related to things such as labor.
=TFC+TVC
Stands for Total Variable Cost
=Q*AFC
=Sum of TFC and TVC
=Q*AVC

TFC
TVC
TC
Qoutput

Question 2

2.

Categorize the Average Cost Terms and Marginal Cost

=AFC+AVC
=Total Cost PER UNIT OF OUTPUT.
Stands for Average Variable Cost
ALWAYS falls as Q rises.
Is a subcomponent of ATC that first falls then rises.
=Δ TC / Δ Q
=Δ TVC / Δ Q
=TC/Q
Stands for Marginal Cost
=Sum of two average costs that first falls then rises.
=TVC / Q
=Change in the firm's TC when it produces another unit of output.
=TFC / Q
Stands for Average Fixed Cost
=ATC-AVC
=Change in TVC from an extra unit of output.
=ATC-AFC
=Fixed Cost PER UNIT OF OUTPUT
=Variable Cost PER UNIT OF OUTPUT
Stands for Average Total Cost

AFC
AVC
ATC
MC