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Unformatted text preview: Q TPL TC TC == L Q Monday, November 06, 2006 OR Q TPL TC TC == L Q • Mankiu page 279 discusses production and costs under eh assumptions we make in class (FC) FIXED COST – A cost that doesn’t change as output varies (VC) VARIABLE COST – A cost that does change with output AVERAGE FIXED COST (AFC) = FC/Q fixed cost per unit of output AVERAGE VARIABLE COST (AVC) = VC/Q variable cost per unit of output AVERAGE TOTAL COST = TC/Q = AVC +AFC total cost per unit of output = VC/Q + FC/Q (MC) MARGINAL COST – The increase in TC that arises from producing one more unit of output MC = ∆ TC/∆Q = slope of the TC curve $ TC VC FC Q • Vertical distance between TC and VC = FC...
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- Fall '08
- Microeconomics, TPL TC TC