This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: how little it produces. One example might be the monthly rent on a store. Added together, TVC and TFC are equal to TC: TVC + TFC = TC TVC and TFC, when divided by q, yield average variable cost (AVC) and average fixed cost (AFC): AVC = TVC/q AFC = TFC/q Added together, AVC and AFC are equal to AC: AVC + AFC = AC We can also find the marginal variable cost (MVC) and the marginal fixed cost (MFC) by taking the slopes of the two curves. Because fixed costs don't change with quantity, however, the MFC will be 0: MVC = (change in TVC)/(change in q) MFC = (change in TFC)/(change in q) = 0 Added together, MVC and MFC are equal to MC, but since MFC is 0, the marginal cost is equal to the marginal variable cost: MVC + MFC = MC MVC + 0 = MC MVC = MC...
View Full Document
- Fall '08
- Microeconomics, total variable costs, marginal variable cost