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H15SupplyLR - Shifting Cost Curves 58 firms VC lower at...

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1 MC MC 1 AVC=VC/Q shifts down firm’s VC lower at every level of output if price of variable input decreases productivity of variable factor increases ATC=TC/Q shifts down Shifting Cost Curves Shifting Cost Curves Quantity ($) TC 1 TC 2 No Change in Fixed Cost Quantity ($) AVC 2 AVC 1 ATC 2 ATC 1 MC= TC/ Q shifts down 58 Profit New Profit Shifting Cost Curves Shifting Cost Curves AVC, ATC, and MC shift down break-even and shut-down prices are lower profit-maximizing level of output increases profit increases Market Price 59 Quantity ($) MC 2 AVC 2 ATC 2 MC 1 AVC 1 ATC 1 Loss Profit Shifting Cost Curves AVC, ATC, and MC shift down break-even and shut-down prices are lower profit-maximizing level of output increases loss can change to profit Market Price 59 Quantity ($) MC 2 AVC 2 ATC 2 MC 1 AVC 1 ATC 1
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