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Unformatted text preview: Public Policy Towards Business 220:389 Spring 2012 January 19, 2012 1. Total cost = total fixed cost + total variable cost 2. Average fixed cost = total fixed cost / units of output 3. Average variable cost = total variable cost / units of output 4. Average total cost = average fixed cost + average variable cost 5. Marginal cost = change in total cost / change in quantity 6. Profit = total revenue total cost 7. Max Profit is when Marginal revenue = marginal cost and marginal profit = 0 Variable Costs 1. Labor (Union) 2. Raw Materials (Cutting costs here causes a lower quality in products) To cut costs: Who do you get rid of first?- Seniority: whoevers the last guy in is the first guy out (union) Fixed Costs 1. Overhead (Non-union) To cut costs: Buy the overhead out (ex. 5-10-2: add 5 years on your age [to retire earlier], 10 years on your seniority at the company [increases pension & health benefits], and give 2 years pay [in a check]) People are rated in corporate America (1-5 scale, 5 being the best). 1 and 5 are both People are rated in corporate America (1-5 scale, 5 being the best)....
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