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Cost mms 10
1.
Cost behavior
2.
3.
4.
Total costs for
firm X Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12
5.
Total costs for
firm X TFC Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12
6.
Total costs for
firm X TFC Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12 TVC (£) 0 10 16 21 28 40 60 91
7.
Total costs for
firm X TVC Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12 TVC (£) 0 10 16 21 28 40 60 91 TFC
8.
Total costs for
firm X TVC TFC Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12 TVC (£) 0 10 16 21 28 40 60 91 TC (£) 12 22 28 33 40 52 72 103
9.
Total costs for
firm X TC Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12 TVC (£) 0 10 16 21 28 40 60 91 TC (£) 12 22 28 33 40 52 72 103 TVC TFC
10.
Total costs for
firm X TC TVC TFC Costs start increasing at an increasing rate here
11.
12.
Average and marginal
costs Output ( Q ) Costs (£) MC x
13.
Average and marginal
costs Output ( Q ) Costs (£) MC x Diminishing marginal returns set in here
14.
Average and marginal
costs Output ( Q ) Costs (£) AFC AVC MC x AC z y
15.
16.
17.
What is the
relationship between average and marginal costs? If MC < AC, then AC is falling If MC > AC, then AC is rising If MC = AC, then AC is constant
18.
COST BEHAVIOR
LONG RUN COSTS
19.
Deriving long-run average
cost curves: factories of fixed size Costs Output O 3 factories 2 factories 1 factory SRAC 3 SRAC 4 SRAC 5 5 factories 4 factories SRAC 1 SRAC 2
20.
Deriving long-run average
cost curves: factories of fixed size SRAC 1 SRAC 3 SRAC 2 SRAC 4 SRAC 5 LRAC Costs Output O
21.
Deriving a long-run
average cost curve: choice of factory size Costs Output O Examples of short-run average cost curves
22.
Deriving a long-run
average cost curve: choice of factory size LRAC Costs Output O
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
Notas del editor
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10
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