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Unformatted text preview: Variable cost: x depends on the level of production x derived from production requirements and input prices o variable cost rises as output rises because firm has to hire more inputs (kapital and labor) to produce larger quantities of output Costs Total vs. Average AVC AFC AC (AVC) Cost Variable Avg. (AFC) Cost Fixed Avg. (AC) Cost Avg. Q VC Q FC Q TC VC FC TC (VC) Cost Variable (FC) Cost Fixed (TC) Cost Total . . . . . TC, VC, FC TC=VC+FC FC VC Q AC, AVC, AFC AC=AVC+AFC AFC AVC Q Page 105...
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- Fall '10