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Ch. 11 Output and Costs

# Total total total avg avg fixed variable total

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Unformatted text preview: AFC + AVC Costs Avg. Total Total Total Avg. Avg. fixed variable Total Marginal fixed variable total fixed cost cost cost cost cost cost cost cost Labour Output (workers (sweaters (TFC) (TVC) (TC) (workers per day) per day) (dollars per day) a b c d e f 0 1 2 3 4 5 0 4 10 13 15 16 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 (MC) (AFC) (AVC) (ATC) — 6.25 6.25 4.17 2.50 8.33 1.92 12.50 1.67 25.00 1.56 — 6.25 5.00 5.77 6.77 7.81 — 12.50 7.50 7.69 8.33 9.38 Exercise - Costs Exercise • Graph the typical curves of the following: – Total fixed cost – Total variable cost – Total cost • Graph the typical curves of the following – Average fixed cost – Average variable cost – Average total cost – Marginal cost • • • • • • • • • TFC + TVC = TC AFC + AVC = ATC AFC = TFC / Q produced AVC = TVC / Q produced ATC = TC / Q produced MC = ∆ TC / ∆ Q produced MC = ∆ ΤVC / ∆ Q produced MC equals ATC and AVC at their minimums If MC < ATC (or AVC), then ATC (or AVC) is decreasing • If MC > ATC (or AVC), then ATC (or AVC) is increasin...
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