Ch. 11 Output and Costs

# 33 4 maximum ap e b f ap 2 mp 0 1 2 3 4 5 labour short

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Unformatted text preview: Average Product Average AP, MP 6 c d 4.33 4 Maximum AP e b f AP 2 MP 0 1 2 3 4 5 Labour Short – Run Costs Short • Total Cost – sum of the costs of all the inputs used • Fixed Cost – cost of a fixed input, does not change with output • Variable Cost – cost of a variable input, changes with output • Marginal Cost – the increase in the total cost by making one more thing Total and Marginal Cost Total Total Total fixed variable Total Marginal fixed cost cost cost cost cost Labour Output (workers (pizzas (workers per day) per day) a b c d e f 0 1 2 3 4 5 0 4 10 13 15 16 (TFC) (TVC) (TC) (MC) (dollars per day) 25 25 25 25 25 25 25 25 0 25 50 75 75 100 100 125 25 25 50 75 100 100 125 125 150 6.25 4.17 8.33 12.50 25.00 Total Costs Cost 150 TC TVC 100 50 TFC 0 5 10 15 Q Average Cost Average Average fixed cost (AFC) is total fixed cost per unit of output. Average variable cost (AVC) is total variable cost per unit of output. Average total cost (ATC) is total cost per unit of output. Marginal Cost and Average Costs Marginal Cost 15 MC ATC 10 AVC 5 AFC 0 5 10 15 Output Average Cost Average TC = TFC + TVC TC TFC TVC = + Q Q Q OR ATC =...
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## This document was uploaded on 03/13/2014.

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