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Class notes MR Structures (11-2-09

# Class notes MR Structures (11-2-09 - Notes Market edit...

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Click to edit Master subtitle style 3/25/10 Notes: Market Structures Profits Cost Curves

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3/25/10 Marginal and Average Cost Total Cost Q=Output MC ATC AVC MC cuts from below at minimum points *short run average cost curves. Minimum points make up the long run average cost curve. Variables of production
3/25/10 Calculate Costs Total Cost Fixed Cost Variable Cost TC = TFC + TVC Total Average Cost Average Fixed Cost Average Variable Cost ATC = AFC + AVC Also: ATC = TC/Q Marginal Cost TC for determining profits Average Costs and Marginal Costs show how things are changing. Marginal Costs change Average Costs—compare to MR Marginal = change Average = Divide by Q

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3/25/10 Total Revenues and Profits Market Price is \$40 per unit sold Q TC TR Profit 1 \$40 40 0 2 50 80 30 3 60 120 60 4 80 160 80 5 120 200 80 Calculate Total Revenue TR = Price*Quantity Profits = TR – TC Marginal Revenue = change in total revenue / change in Q
3/25/10 Total Cost Recall: Total Cost TC = TFC + TVC ATC = TC / Q You know ATC and Q Therefore: TC = ATC * Q *TC= rK + wL

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Class notes MR Structures (11-2-09 - Notes Market edit...

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