ECON 1P91 Lecture Notes - Lecture 5: Fixed Cost, Longrun, Microcystin-Lr

• School: Brock University
• Department: Economics
• Course: ECON 1P91
• Professor: Marilyn Cottrell

Document Summary

Fixed costs do not vary with production: pla(cid:374)t a(cid:374)d e(cid:395)uip(cid:373)e(cid:374)t, ta(cid:454)es, i(cid:374)su(cid:396)a(cid:374)ce, (cid:373)o(cid:396)tgage pa(cid:455)(cid:373)e(cid:374)t, (cid:396)e(cid:374)t, (cid:373)a(cid:374)age(cid:396)"s salary, paid regardless of production, tfc and afc. Total fixed costs [tfc] do not varu with output. Average fixed costs [afc] vary with output: q increase while tfc remain the same spreading overheas, slope of afc flattens as more is produced, afc approach but never reach zero. Marginal fixed costs [mfc] are always zero. Variable cost increase as prodiction increases: labour, materaisls, electrical utilities. If plant closed, these costs not incurred: yvc, avc, mc, and. Rate of change in tc or the increase in tc caused by an additional unit being produced. Mc cuts ac and avc at their minimum points. Vertical distance btwn ac and avc is afc: distance shrinks as q increases because afc decreases. Increase i factor prices: product curves shift down, cost curves shift up. Increase in technology increases productivity: product curves shift up, cost curves shift down.