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    Cost On A Short-Run Fixed Cost, Variable Cost and Total Cost

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    Ronel Cachero
    This document defines key concepts related to costs in the short run, including fixed costs, variable costs, total costs, average costs, and marginal costs. It explains that in the short run fixed costs do not change with output, while variable costs vary directly with output. It provides examples of fixed and variable costs. It also defines total cost as the sum of fixed and variable costs, and introduces equations for calculating average fixed cost, average variable cost, average total cost, and marginal cost.

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    Cost On A Short-Run Fixed Cost, Variable Cost and Total Cost

    Uploaded by

    Ronel Cachero
    33 views1 page
    This document defines key concepts related to costs in the short run, including fixed costs, variable costs, total costs, average costs, and marginal costs. It explains that in the short run fixed costs do not change with output, while variable costs vary directly with output. It provides examples of fixed and variable costs. It also defines total cost as the sum of fixed and variable costs, and introduces equations for calculating average fixed cost, average variable cost, average total cost, and marginal cost.

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    Economics

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    Writtenreport.econ.

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    This document defines key concepts related to costs in the short run, including fixed costs, variable costs, total costs, average costs, and marginal costs. It explains that in the short run fixed costs do not change with output, while variable costs vary directly with output. It provides examples of fixed and variable costs. It also defines total cost as the sum of fixed and variable costs, and introduces equations for calculating average fixed cost, average variable cost, average total cost, and marginal cost.

    Copyright:

    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    33 views1 page

    Cost On A Short-Run Fixed Cost, Variable Cost and Total Cost

    Uploaded by

    Ronel Cachero
    This document defines key concepts related to costs in the short run, including fixed costs, variable costs, total costs, average costs, and marginal costs. It explains that in the short run fixed costs do not change with output, while variable costs vary directly with output. It provides examples of fixed and variable costs. It also defines total cost as the sum of fixed and variable costs, and introduces equations for calculating average fixed cost, average variable cost, average total cost, and marginal cost.

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    © All Rights Reserved
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    of 1

    Ronel E.

    Cachero
    Theory and Practice

    ECON 2023| Introduction to Microeconomic

    Cost on a Short-Run
    Fixed Cost, Variable Cost and Total Cost
    -- In the short run, at least one factor of production is fixed; this means that output can be increased by
    adding more variable factors such as employing more workers and buying in more raw materials.

    Fixed Cost/Total Fixed Cost (TFC)

    Overhead costs of a business


    Do not even change w/ output, firms must pay these even if they shut down.
    Examples include the rental costs of buildings, the costs of leasing or purchasing capital
    equipment, the annual business rate charged by local authorities, etc.

    Average Fixed Cost (AFC) = TFC/Output

    Variable costs/Total Variable costs (TVC)

    Variable costs vary directly w/ output


    Examples include the cost of raw materials and components, packaging and distribution costs, the
    wages of part-time staff or employees paid by the hour etc.

    Average Variable Costs (AVC) = TVC/Output

    Total Cost (TC) Total cost = Fixed costs + Variable costs


    Average Total Cost is the cost per unit produced ATC = Total Cost/Output

    Marginal Cost (MC)

    It is the change in total costs from increasing output by one extra unit
    The marginal cost of supplying extra units of output is linked w/ the marginal productivity of
    labor.
    The law of diminishing marginal returns implies that marginal cost will eventually rise as output
    increases.

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