# Note2 ch9 - Econ 251 Fall 2009 Handout 15 Chapter 9(contd Profits Production and Costs I Short-Run Cost We describe the relationship between output

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Econ 251 Fall 2009 Handout 15 10/15/09 1 Chapter 9 (cont’d) – Profits, Production and Costs I. Short-Run Cost We describe the relationship between output and cost by using three related concepts: 1. Total Cost 2. Average Cost 3. Marginal Cost 1. Total Cost Total cost (TC): Fixed Cost (FC): Variable Cost (VC): 2. Average Cost Average Total Cost (ATC): Average Fixed Cost (AFC): Average Variable Cost (AVC):

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Econ 251 Fall 2009 Handout 15 10/15/09 2 Example: John’s Pizza place L # of Pizzas (per night) FC VC TC AFC AVC ATC 0 0 10 0 1 20 10 5 2 58 10 10 20 .17 .17 .34 3 75 10 15 25 .13 .2 .33 4 85 10 20 30 .12 .23 .35 5 90 10 25 35 .11 .28 .39 1. The AFC __________________________________ Graph: 2. AVC and ATC _______________________________ 3. ________________________________________________________
Handout 15 10/15/09 3 3. Marginal Cost Example: John’s Pizza Place L # of Pizzas (per night) FC VC TC MC= 0 0 10 0 10 1 25 10 5 15 2 58 10 10 20 .15 3 75 10 15 25 .29

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## This note was uploaded on 10/04/2011 for the course ECONOMICS 251 taught by Professor Kelly during the Spring '11 term at Purdue University-West Lafayette.

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Note2 ch9 - Econ 251 Fall 2009 Handout 15 Chapter 9(contd Profits Production and Costs I Short-Run Cost We describe the relationship between output

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