Class Notes (1,100,000)
CA (620,000)
Brock U (10,000)
ECON (200)
ECON 1P91 (100)
Lecture 9

ECON 1P91 Lecture Notes - Lecture 9: Fixed Cost

Course Code
Professor Cottrel

This preview shows pages 1-2. to view the full 7 pages of the document.
ECON1P91 Lecture 9(Feb.11, 2016)
Chapter 8: Business Costs and Produc#on
Short-Run costs:
*Fixed costs do not vary with producon.
*Plant and equipment, taxes, insurance, mortgage payment, rent, managers salary
*Paid regardless of producon
*Total Fixed Cost and Average Fixed Cost.
Fixed Costs:
*Total "xed costs[TFC] do not vary with output.
*Independent of output level.
*Average "xed costs[AFC] vary with output
-Q goes up while TFC remain the same-spreading overhead.
-Slope of AFC (a)ens as more is produced.
-AFC approach, but never reach zero.
*Marginal Fixed Costs[MFC] are always zero.
Diagram 1.

Only pages 1-2 are available for preview. Some parts have been intentionally blurred.

*Variable costs increase as producon increases.
-Labor, materials, electrical ulies.
-If plant closed, these costs not incurred.
-TVC, AVC, MC and TC.
Diagram 2.
You're Reading a Preview

Unlock to view full version