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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 Long Run Costs In the Long Run, the firm can vary the
quantity of labor (L) (variable in the short run)
and quantity of capital (K) (fixed in the short
11 Changing Amount of Labor and
Capital Could Cause 1 of 3 Things
Capital Economies of Scale: Output increases by an
even higher % than the % a firm increases its
inputs (K and L) by.
Diseconomies of Scale: Output increases by a
smaller % than the % a firm increases...
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This document was uploaded on 03/23/2014.
- Spring '14