12 Economic Costs (1)

20 and produces 6 gallons of smoothies an hour at a

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: Total Costs Average Costs Total Cost at 5 Gallons = $26.20 Total Cost at 6 Gallons = $28.00 Average Cost at 5 Gallons = $5.24 (=TC/Q=$26.20/5) Average Cost at 6 Gallons = $4.67 (=TC/Q=$28.00/6) Marginal Costs Marginal Cost at 6 Gallons = $1.80 (= TC/ Q=(28.00-26.20)/(6-5) 10 10 Long Run Costs In the Long Run, the firm can vary the In quantity of labor (L) (variable in the short run) and quantity of capital (K) (fixed in the short run). run). 11 11 Changing Amount of Labor and Changing Capital Could Cause 1 of 3 Things Capital Economies of Scale: Output increases by an Economies even higher % than the % a firm increases its inputs (K and L) by. inputs Diseconomies of Scale: Output increases by a Diseconomies smaller % than the % a firm increases...
View Full Document

{[ snackBarMessage ]}

Ask a homework question - tutors are online