microbook_3e-page37 - x Is the supply curve when MC > AC...

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Firm Supply Total Cost : TC = FC + VC x Fixed costs (FC) – repayment of loans, lump sum taxes, etc. x Variable costs (VC) – labor, raw materials, electricity, etc. Avera ge Cost : AC = AFC + AVC x Average fixed cost (AFC) decreases as output increases x Average variable cost (AVC) increases as output increases (at least at higher output levels) Mar ginal Cost (MC): x Rate of change in total costs from extra unit of output
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Unformatted text preview: x Is the supply curve when MC > AC Movement along Supply Curve vs. Shift of Supply Movement alon g: x Only if there is a change in the good’s price (shift of demand curve) Shift of suppl y, due to changes in: x Costs: o wages o dividend payments o raw materials x Technology o more productive machines o increased efficiency with which firm uses its inputs into its production Page 37...
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This note was uploaded on 12/29/2011 for the course ECO 311 taught by Professor Willis during the Fall '10 term at SUNY Stony Brook.

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