Economics 1021A Chapter 11

Total total avg avg fixed variable total marginal

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Unformatted text preview: AFC AVC Costs Avg. Total Total Avg. Avg. fixed variable Total Marginal fixed variable total cost cost cost cost cost cost cost Labour Output (workers (sweaters (TFC) (TVC) (TC) per day) per day) (dollars per day) a b c d e f 0 1 2 3 4 5 0 4 10 13 15 16 25 25 25 25 25 25 0 25 50 75 100 125 25 50 75 100 125 150 (MC) (AFC) (AVC) (ATC) — 6.25 6.25 4.17 2.50 8.33 1.92 12.50 1.67 25.00 1.56 — 6.25 5.00 5.77 6.77 7.81 — 12.50 7.50 7.69 8.33 9.38 Exercise - Costs • Graph the typical curves of the following: – Total fixed cost – Total variable cost – Total cost • Graph the typical curves of the following – Average fixed cost – Average variable cost – Average total cost – Marginal cost • • • • • • • • • TFC + TVC = TC AFC + AVC = ATC AFC = TFC / Q produced AVC = TVC / Q produced ATC = TC / Q produced MC = TC / Q produced MC = VC / Q produced MC equals ATC and AVC at their minimums If MC < ATC (or AVC), then ATC (or AVC) is decreasing • If MC > ATC (or AVC), then ATC (or AVC) is increasing Fill in the...
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