Average total cost, Microeconomics

Assignment Help:

Average Total Cost (ATC): ATC is the total cost per unit of output.

ATC = TC/y = (TFC + TVC)/y = AFC +AVC

ATC falls sharply at the beginning of the production process because both AVC and AFC are declining. When AVC begins rising but AFC is falling steeply, then the ATC continues to fall. Then the AVC rises sharply and offsets the fall in AFC causing the ATC to fall. The shape of the ATC curve is almost u-shaped.

• Marginal Cost (MC): MC is the addition to the total cost generated by increasing production by one unit. It is the slope of the TC curve.

Mathematically, MC = ΔTC / Δy.

The behaviour of the marginal product curve determines the MC curve, which is the inverse of the former.Before to attempt to plot the cost curves, it is important to know the rules of averages and marginal quantities. According to these mathematical rules,

When MC < AC then AC decreases.

When MC > AC then AC rises.

When MC = AC then average costs are at the minimum.


Related Discussions:- Average total cost

Elasticity, if australian governmrnt imposed a sales tax on petrol by $0.25...

if australian governmrnt imposed a sales tax on petrol by $0.25, then the price of petrol will rise by 0.25. consumers can not get by without petrol, so they have to pay the whole

Explain the concept of land economic, (a) Give an overview of the Concept ...

(a) Give an overview of the Concept of Land Economic (b) Provide a definition of Land/Economics (c) Discuss the origin of Land Economics (d) Modern and Traditional Land Ec

Labor Economics, What is Nancy’s lifetime income as a function of her level...

What is Nancy’s lifetime income as a function of her level of schooling, S? 2. What is Nancy’s lifetime income if she gets no schooling? What is it if she goes to school for all 60

Define why prices is significant for economy, Define why prices is signific...

Define why prices is significant for economy Reason for using different weights is that some prices are more significant than others for economy. Price of gasoline, for instanc

What is neoliberalism, Neoliberalism So much thinking about the proper ...

Neoliberalism So much thinking about the proper role of government in economic growth over the past 2 decades has tends to conclusions which are today known as neo-liberal. The

Help, In a competitive market, the market demand is Qd = 150 - 5P and the m...

In a competitive market, the market demand is Qd = 150 - 5P and the market supply is Qs = 5P - 10. As a result of a price ceiling imposed at $14, the new consumer surplus and produ

Determinants of social demand for education, Determinants of Social Demand ...

Determinants of Social Demand for Education Certain levels of education like the secondary school and graduate level are considered as having productive value and are attribut

Development plan, Development plan: A Development Plan is a document w...

Development plan: A Development Plan is a document which contains a policy framework and programme of development for a time period for a country. It sets out the general meas

Indifferentces curve, using the tools of an indifference curve and isoquent...

using the tools of an indifference curve and isoquent, highlight on consumption and production in business economics.

Explain about counter-cyclical policies, Q. Explain about Counter-Cyclical ...

Q. Explain about Counter-Cyclical Policies? Counter-Cyclical Policies:Governments may take many different actions to offset ongoing booms and busts of private-sector economy. T

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd