E303lect30F09 - November 4 2009 Reading Ch 5 pp 177-185 HW...

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November 4, 2009 Reading: Ch. 5, pp. 177-185 HW Problem Set #10.Due Monday Lecture 30 REVIEW___________________________________________________: C. Costs 1. The relationship of production functions to cost functions. 2. Short run costs. a. Cost curves 1. TC, TVC and TFC,. MC, AVC and ATC 2. Graphical Representations 3. Relationship between MC and AVC/ATC a. (The MC cuts these curves at their minimum points, because the marginal drives the averages) b. Relationship between AVC and ATC (ATC and AVC approach each other as output expands, since the difference between the two is AFC, which is a constant cost, divided over progressively more units.) Preview__________________________________________________________ 3. The supply curve for the firm (n.b. This gets just a little ahead of the text) a. Marginal Revenue and Average Revneue b. Optimal production i. Production with profits ii Production at a loss iii. Breakeven point iv. Shutdown point c. The supply curve for the firm: MC about the shutdown point. Lecture______________________________________________________________. 3. The production decision for a firm . In this development, we will use the per unit cost relations that we used last time.
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