ECON 1011 Lecture Notes - Lecture 19: Average Variable Cost, Average Cost, Marginal Cost

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ECON 1011 Lecture Notes - Lecture 18: Fixed Cost, Variable Cost, Marginal Product

ECON 1011 Lecture Notes - Lecture 19: Average Variable Cost, Average Cost, Marginal Cost

ECON 1011 Lecture 21: ECON 1011 Lecture : Long Run Costs, Economies of Scale & Revenue Curve

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Eg. if tc = 16 + q2 and vc = q2. Since tc = fc + vc, fc = tc vc. Therefore 16 + q2 q2 = 16 = fc. Note: fixed cost has no impact on marginal cost as the slope of tc and vc are equal. Therefore, average total cost = average fixed cost + average variable cost. Atcmes (lowest atc) = slope of tangent from the origin. Atc" (highest atc) = slope of line to the highest point of the tc curve. To find the mc curve, find the slopes of the tc curve and graph it. Someone coming in through the door is 5"1. Another person coming in through the door is 6"4. Therefore, when the marginal cost is lower than the atc, the atc will be pulled down as the average must be decreasing. When mc is higher than the atc, the. Atc will be pulled upwards as the average must be rising.

Related Questions

Given following Price and Total Cost functions:

P = 120 - 7Q

TC = 40 + 70Q - 10Q² + 0.6Q³

Where P = price, and Q is output.

Fill in the table below and answer the questions below the table.

Q	P	FC	TVC	TC	TR	Profit
0
1
2
3
4
5
6
7
8
9
10

If your company's goal is to maximize profit, answer the following questions below:

What price will you charge for your product?

What quantity will you produce?

And what would be your maximum profit or minimum loss at the price and output you chose?

2. If your company's goal is to maximize total revenue, answer the following questions below:

What price will you charge for your product?

What quantity will you produce?

And what would be your maximum total revenue at the price and output you chose? (3 points)

Question 3

Given a firm with the following cost data, fill in the table below.

Q = OUTPUT TFC = Total Fixed Cost AVC = Average Variable Cost ATC = Average Total Cost TVC = Total Variable Cost MC = Marginal Cost TC = Total Cost

Q	FC	TVC	TC	AVC	ATC	MC
0				---	---	---
1						10
2
3				10		10
4

yellowsea-lion638

I have this short-run total cost function TC(x) = 25x + 100, and x is the quantity produced.

a) Find the Fixed Cost of production: FC=

b) Find Variable Cost production: VC(x)=

c) Find the equation for Average Fixed Cost: AFC(x)=

d) Find the equation for Average Variable Cost: AVC(x)=

e) Show the equation for Average Cost: AC(x)=

f) Show the equation for Average Cost of producing x=10 units of output: AC(10)=

g) Find the Marginal Cost of production: MC(x)=

skyotter83

Answer the following questions pertaining to the graph.

1. What is the shape of the AVC and ATC curves? What economic law accounts for this shape? How do you know this?

2. What is the shape of the MC curve? Why does it have this shape? How do you know this?

3. What do you know about the values of AVC and ATC at the points where MC crosses them?

4. Is the AVC higher than the ATC or lower than it? How do you know this?

5. Is the costs in the short run or the long run? How do you know this?

6. Assume the company above is in a Perfect Competition Industry: If the price of the product is $20 that is sold at, what will be the profits and how many will be sold at that price? Can the company raise the price?

7. Again in a Perfect Competition Industry: What would the profit situation be at a price of $30, how much to sell at that price?

8. With the Perfect Competition industry: What would the profit situation be at a price of $10, how much to sell at that price?

9. What are the characteristics of a perfect competition company and industry?

Following is the complete table -

Q	FC	VC (TC-FC)	TC	AFC (FC/Q)	AVC (VC/Q)	ATC (TC/Q)	MC (TC_n-TC_n-1)
0	10	0	10	-	-	-	-
1	10	10	20	10	10	20	10
2	10	18	28	5	9	14	8
3	10	23	33	3.33	7.67	11	5
4	10	33	43	2.5	8.25	10.75	10
5	10	48	58	2	9.6	11.6	15
6	10	68	78	1.67	11.33	13	20
7	10	98	108	1.43	14	15.42	30
8	10	148	158	1.25	18.5	19.75	40

coralcamel331

ECON 1011 Lecture Notes - Lecture 19: Average Variable Cost, Average Cost, Marginal Cost

ECON 1011 Lecture Notes - Lecture 18: Fixed Cost, Variable Cost, Marginal Product

ECON 1011 Lecture Notes - Lecture 19: Average Variable Cost, Average Cost, Marginal Cost

ECON 1011 Lecture 21: ECON 1011 Lecture : Long Run Costs, Economies of Scale & Revenue Curve

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