3.3-Costs

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Created by
Tajah Latisha

Cards (11)

  • What is the difference between Fixed and Variable Costs?
    • Fixed costs have to be paid regardless of output produced by firms
    • Variable costs are dependent on the output produced by firms
  • What is Marginal Cost?
    The change in cost of producing an additional unit
  • How is Total Cost calculated?
    Total Fixed Costs +Total Variable Costs
  • How is Total Variable Cost calculated?
    Variable cost X Quantity sold
  • How is Avg. Total Cost calculated?
    Total Cost/ Qty
  • How is Avg. Fixed Cost calculated?
    Total Fixed Costs/ Qty
  • How is Avg. Variable costs calculated?
    Total Variable costs/ QTY
  • How is Marginal Cost calculated?
    Change in total cost/ Change in quantity
  • What influences the shapes of MC and AC curves?
    Law of diminishing marginal productivity
  • What influences the shape of the LRAC?
    Economies of scale
  • What is the LRAC curve?
    the line of best fit between the lowest points of the short-run ATC curves