3-11-09 - • FC will be the part of the TC function that...

Info iconThis preview shows pages 1–10. Sign up to view the full content.

View Full Document Right Arrow Icon
Microeconomics – Class Notes – 3/11/09
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 2
T-Method Use the t-method to determine the “returns to scale”
Background image of page 3

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Logarithmic – section 6.2 Elasticity section DON’T HAVE TO KNOW THIS FOR QUIZ
Background image of page 4
END OF CHAPTER #6 MATERIAL
Background image of page 5

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
CHAPTER #7
Background image of page 6
Background image of page 7

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
IN-CLASS WORKSHEET Q TC AC AVC MC 0 450 - - 100 5 875 175 85 75 10 1250 125 80 80 (73.75) 15 1725 115 85 115 20 2450 1225 100 180 AC and MC are the same when the minimum of the AC curve is reached, thus it seems as though an output of 15 units is the minimum (AC = MC at the minimum of Q=15) o When AC=MC Average Cost minimum AVC = MC (the minimum of the average variable cost ) You can tell the difference between VC and FC by: VC will be the part of the TC function that varies (like Q^2)
Background image of page 8
Background image of page 9

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Background image of page 10
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: • FC will be the part of the TC function that does NOT vary (a constant, like 9) • The marginal cost is always above the AVC, so the AVC is always rising So, to determine what the shape of the AC looks like (AC = Q + (9/Q)) • Set AC=MC • [(Q^2 + 9) / Q ] = (2*Q)*Q o Q^2 + 9 = 2Q^2 o 9 = Q^2 o Q = 3 AC will always be above AVC in this case FOR QUIZ OR EXAM: • Tell him what’s wrong with this picture (2 things) ATC (AC) is below the AVC (negative FC for some range and positive FC for another range) The MC MUST intersect the AC at the minimum. READ CHAPTER #7...
View Full Document

This note was uploaded on 06/03/2009 for the course ECON 200 taught by Professor Nonnenmacher during the Spring '09 term at Allegheny.

Page1 / 10

3-11-09 - • FC will be the part of the TC function that...

This preview shows document pages 1 - 10. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online