Lecture 13

# Lecture 13 - 6 Costs Total Costs(\$ 200 360 440 480 540 640...

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10/28/2009 1 Costs Output Quantity Produced Labor Input (hrs) Variable Costs at (\$20/hr) 0 0 0 2 8 160 6 ± Costs determined by ± technology 4 12 240 200 440 6 14 280 200 480 8 17 340 200 540 10 22 440 200 640 12 30 600 200 800 14 42 840 200 1040 16 58 1160 200 1360 18 78 1560 200 1760 20 102 2040 200 2240 ± cost of inputs ± TC=FC+VC Output Quantity Produced Labor Input (hrs) Variable Costs at (\$20/hr) Fixed Costs (\$) 0 0 0 200 2 8 160 200 Costs 6 ± Costs determined by ± technology 4 12 240 200 440 6 14 280 200 480 8 17 340 200 540 10 22 440 200 640 12 30 600 200 800 14 42 840 200 1040 16 58 1160 200 1360 18 78 1560 200 1760 20 102 2040 200 2240 ± cost of inputs ± TC=FC+VC Output Quantity Produced Labor Input (hrs) Variable Costs at (\$20/hr) Fixed Costs (\$) Total Costs (\$) 0 0 0 200 200 2 8 160 200 360 Costs ± Costs determined by ± technology 0 500 1000 1500 2000 024681 01 21 41 6 1 82 0 Costs (\$) 6 4 12 240 200 440 6 14 280 200 480 8 17 340 200 540 10 22 440 200 640 12 30 600 200 800 14 42 840 200 1040 16 58 1160 200 1360 18 78 1560 200 1760 20 102 2040 200 2240 ± cost of inputs ± TC=FC+VC Average Costs Output Quantity Variable Costs (\$) Total Costs (\$) Average Variable Costs (\$/unit) Average Total Costs (\$/unit) 0 0 200 - - 16 36 80 0 180 0 6 TC Q VC Q 40 20 30 50 80 120 160 200 240 2 160 360 80.0 180.0 4 240 440 60.0 110.0 6 280 480 46.7 80.0 8 340 540 42.5 67.5 10 440 640 44.0 64.0 12 600 800 50.0 66.7 14 840 1040 60.0 74.3 16 1160 1360 72.5 85.0 18 1560 1760 86.7 97.8 20 2040 2240 102.0 112.0 6 Average Costs 250 ± AVC = VC/Q = wL/Q ± AP L = Q/L ± AVC increases with Q when AP L is falling ± falls initially and then rises quickly as the point of diminishing marginal returns (DMR) is reached ; VC = AVC Q Q=4 0 50 100 150 200 0 2 4 6 8 1 61 0 Output Quantity AVC ± AVC shifts with ± change in AP L ± change in cost variable input VC = 60 4 = 240 Costs (\$/unit) Average Costs 6 ± ATC = AVC + AFC; ATC = TC/Q ± AFC = FC/Q ± AFC fall steadily as output increases 250 0 50 100 150 200 0 Output Quantity AVC ATC

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10/28/2009 2 ± AVC fall initially and then rises quickly as DMR is reached ± ATC fall initially and then rises as DMR is reached ± ATC = AVC + AFC; ATC = TC/Q ± AFC fall steadily as output increases
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## This note was uploaded on 03/21/2010 for the course ECON 101 taught by Professor Gerson during the Fall '08 term at University of Michigan.

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Lecture 13 - 6 Costs Total Costs(\$ 200 360 440 480 540 640...

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