ECON 1B03 Lecture Notes - Lecture 7: Average Variable Cost, Marginal Revenue, Marginal Cost
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Chapter 7: production and costs & chapter 8: perfect competition. *economic profit = total revenue total opportunity cost (explicit costs + implicit. *total fixed cost, tfc = do not vary with the amount of output produced. *average fixed costs, afc = the fixed cost per unit of output = *total variable costs, tvc = do vary with the quantity if output produces. *average variable costs, avc = the variable cost per unit of output = *total cost, tc = total fixed costs + total variable costs = tfc + avc. *average total cost, atc = the total cost per unit of output = *increasing return to scale, irs: if you increase the quantity of output produced, lrac falls (over the range from 0 to q1). *decreasing returns to scale, drs: if you increase the quantity of output produced, Lrac rises (for any output greater than q2).