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Chapter 11 and 13 - no matter units produced 1 VC –...

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Chapter 11 Characteristics of Goods A) Rival – Use of Goods prevents others from use. B) Excludable – If you don’t pay you don’t receive the good. - Private – Rival / Excludable ( NFL TICKETS) - Public – Not Rival Nor Excludable (Free Concert) - Common Resource – Rival / Non-Excludable (Fishing in the Lake) - Common Monopoly – Non-Rival/Excludable (Cable TV) National Defense – Non-Excludable & Non-Rival Public Goods - Very Important - Very Expensive - 2007 $439 Billion @ $1,447 Per. Person [ Wars Iraq & Afghan. Cost (2007) $2,063 Per. Person Free Rider Problem – Someone who receives the benefit of a Good, Yet does not pay for it. Chapter 13 Variable Cost – Cost that varies with output (per unit produced) Fixed Cost – Cost that stays the same
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Unformatted text preview: no matter units produced 1) VC – Subway (Meat, Cheese, Labor) 2) FC – Subway ( Rent, Property Taxes) Total Cost (TC) = (VC + FC) = TC (MC) Marginal Cost – Additional cost to make 1 more unit. (OR) The Change in Total Cost Divided change in output (AVC) Average Variable Cost = Variable cost DIVIDED Output (AFC) Average Fixed Cost = Fixed cost DIVIDED Output “Spreading out your Overhead” (ATC) Average Total Cost = Total Cost DIVIDED Output “The Cost of Producing the typical unit” (MP) Marginal Product = Additional Output from one more input-MP = Change Output Divided Change in Input-MP Labor = Change in Out Divided by Change in Workers (AP) Average Product = Output Divided by Input -AP Labor = Output Divided by Workers...
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