Scribd Logo
Upload

Welcome to Scribd!

  • 7 views

    Econ

    Uploaded by

    vivek3790
    This document provides information on costs in the short run for a firm. It discusses total fixed costs, total variable costs, and total costs as output increases. It also examines marginal cost, average fixed cost, average variable cost, average total cost, and the relationship between marginal cost and average cost curves. As output increases, marginal cost initially falls then rises, while average costs fall until minimum efficient scale is reached, after which costs begin rising again due to diminishing returns.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd

    Econ

    Uploaded by

    vivek3790
    7 views16 pages
    This document provides information on costs in the short run for a firm. It discusses total fixed costs, total variable costs, and total costs as output increases. It also examines marginal cost, average fixed cost, average variable cost, average total cost, and the relationship between marginal cost and average cost curves. As output increases, marginal cost initially falls then rises, while average costs fall until minimum efficient scale is reached, after which costs begin rising again due to diminishing returns.

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    PPT, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    This document provides information on costs in the short run for a firm. It discusses total fixed costs, total variable costs, and total costs as output increases. It also examines marginal cost, average fixed cost, average variable cost, average total cost, and the relationship between marginal cost and average cost curves. As output increases, marginal cost initially falls then rises, while average costs fall until minimum efficient scale is reached, after which costs begin rising again due to diminishing returns.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    7 views16 pages

    Econ

    Uploaded by

    vivek3790
    This document provides information on costs in the short run for a firm. It discusses total fixed costs, total variable costs, and total costs as output increases. It also examines marginal cost, average fixed cost, average variable cost, average total cost, and the relationship between marginal cost and average cost curves. As output increases, marginal cost initially falls then rises, while average costs fall until minimum efficient scale is reached, after which costs begin rising again due to diminishing returns.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PPT, PDF, TXT or read online from Scribd
    Download as ppt, pdf, or txt
    of 16

    COST ANALYSIS

    Costs in the Short run


    Fixed costs and variable costs Total costs
    total fixed cost (TFC) (TFC) total variable cost (TVC) (TVC) total cost (TC = TFC + TVC) (TC TVC)

    Output TFC (Q) (Rs)


    100

    Total costs for firm X

    80

    60

    40

    0 1 2 3 4 5 6 7

    12 12 12 12 12 12 12 12

    20

    0 0 1 2 3 4 5 6

    TFC
    7 8

    100

    Output TFC TVC (Q) (Rs) (Rs) 0 1 2 3 4 5 6 7 12 12 12 12 12 12 12 12 0 10 16 21 28 40 60 91

    Total costs for firm X


    TV C

    80

    60

    40

    20

    TFC
    0 0 1 2 3 4 5 6 7 8

    100

    Output TFC TVC TC (Q) (Rs) (Rs) (Rs) 0 1 2 3 4 5 6 7 12 12 12 12 12 12 12 12 0 10 16 21 28 40 60 91 12 22 28 33 40 52 72 103

    Total costs for firm X


    TC TVC

    80

    60

    40

    20

    TFC
    0 0 1 2 3 4 5 6 7 8

    Costs in the Short run


    Marginal cost
    Additional cost for producing additional output Slope of TC First derivative of total cost function

    Output TFC TVC TC (Q) (Rs) (Rs) (Rs)


    100

    Total costs for firm X


    TC

    80

    60

    0 1 2 3 4 5 6 7

    12 12 12 12 12 12 12 12

    0 10 16 21 28 40 60 91

    12 22 28 33 40 52 72 103

    MC

    40

    20

    TFC
    0 0 1 2 3 4 5 6 7 8

    Average and marginal costs


    MC

    Costs (Rs)

    Output (Q)

    Costs in the Short run


    Average cost
    average fixed cost (AFC) (AFC) average variable cost (AVC) (AVC) average (total) cost (AC) (AC)

    Average and marginal costs


    MC AVC

    Costs (Rs)

    y x

    Output (Q)

    Average and marginal costs


    MC AVC

    Costs (Rs)

    y x AFC

    Output (Q)

    Average and marginal costs


    MC AC AVC

    Costs (Rs)

    z y x AFC

    Output (Q)

    Costs in the Short run


    Relationship between the marginal and total cost curves Marginal / average cost (MC) and the law (MC) of diminishing returns

    Total costs for firm X


    TC
    100

    MC

    AC

    80

    60

    40

    20

    0 0 1 2 3 4 5 6 7 8

    Comparison of production and cost


    40

    TPP
    30

    TC
    20
    100

    10
    80

    MC AC
    0 1 2 3 4 5 6 7 8
    60

    a
    14 12 10 8 6 4
    40

    20

    a
    0 0 1 2 3

    b
    4 5 6 7 8

    APP
    2 0 -2 0 1 2 3 4 5 6 7 8

    MPP

    Thank you..

    You might also like