ECON 200 Lecture Notes - Lecture 33: Marginal Cost, Marginal Product
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ECON 200 Full Course Notes
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Econ 200 i lecture 33 various measures of cost and short/long run costs. Fixed cost (fc): costs that do not vary with the quantity of output produced: ex. Cost of land or factory (a firm owner has to pay a fixed amount each month to rent out space for their firm) Variable cost (vc): costs that do vary with the quantity of output produced: ex. Cost of workers" wages (with more workers, you have to pay them more) Total cost = fixed cost + variable cost: tc = fc + vc. Average cost (ac): costs divided by the quantity of the output, yields: average total cost (atc) = tc/q = afc + avc, average fixed cost (afc) = fc/q, average variable cost (avc) = vc/q. Marginal cost (mc): the increase in total cost from an additional unit of production: mc = (delta tc)/(delta q, basically, it is the change in total cost divided by the change in quantity.
