ECON 101 2Midtermreview

ECON 101 2Midtermreview

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Unformatted text preview: (MC) is the increase in total cost that results from a one- unit increase in total product. Over the output range with increasing marginal returns, marginal cost falls as output increases. Over the output range with diminishing marginal returns, marginal cost rises as output increases. Average Cost Average cost measures can be derived from each of the total cost measures: Average fixed cost (AFC) is total fixed cost per unit of output. Average variable cost (AVC) is total variable cost per unit of output. Average total cost (ATC) is total cost per unit of output. ATC = AFC + AVC. Figure 11.5 shows the MC, AFC, AVC, and ATC curves. The AFC curve shows that average fixed cost falls as output increases. The AVC curve is U- shaped. As output increases, average variable cost falls to a minimum and then increases. Why the Average Total...
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This note was uploaded on 03/29/2014 for the course ECON 101 taught by Professor Vanderwaal during the Spring '08 term at Waterloo.

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