lectur21-page1 - Average variable costs (AVC) : a. The...

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PRODUCTION COSTS: SHORT RUN AVERAGE COST CURVES 1. Average fixed cost (AFC) : a. AFC decreases throughout the output (Q) range. b. If we extend the output range further to the right, AFC moves closer and closer to the horizontal axis (Q - axis). c. WHY? AFC = TC / Q AFC as Q . 2.
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Unformatted text preview: Average variable costs (AVC) : a. The average variable cost curve is U - shaped. b. AVC first decreases, reaches a minimum, and the increases. c. WHY? Something you learned a little earlier known as the LAW OF DIMINISHING RETURNS and the LAW OF INCREASING COSTS....
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

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