12 Economic Costs (1)

Labor 4 total costs total cost curves cost total

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Unformatted text preview: Total Cost Curves Cost Total Curve=FC+VC Variable Cost Curve Fixed Cost Curve Fixed Costs Amount Variable Cost Amount at a given output. Output 5 Average Costs Q is quantity of output. Average fixed costs: AFC=TFC/Q Average variable costs: AVC=TVC/Q Average fixed costs decline as output increases because the total Average fixed costs are spread over a larger and larger output. fixed As added variable resources increase output, average variable As cost declines initially, reaches a minimum, and then increases again. As a result, AVC is U-shaped. again. Average total costs: ATC=TC/Q=AFC+AVC Graphically, ATC can be found by vertically adding the AFC Graphically, and AVC curves. and 6 Total Costs vs. Average Costs Tot...
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