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Unformatted text preview: Total Cost Curves Cost
Curve Fixed Cost Curve
Amount Variable Cost
Amount at a
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
fixed costs are spread over a larger and larger output.
As added variable resources increase output, average variable
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
and AVC curves.
6 Total Costs vs. Average Costs Tot...
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- Spring '14