Microeconomics · free preview
From Production to Costs
Pricing the production function yields fixed, variable and total costs, dividing by output yields average costs, differencing yields marginal cost, and diminishing returns give the curves their U-shapes.
1. Pricing the technology
Pricing the technology
2. The averages and their shapes
The averages and their shapes
3. Why the U-shape matters
Why the U-shape matters
4. Economic costs include what is not paid
Economic costs include what is not paid
5. Marginal cost from the table
Using the bakery table, going from 4 to 5 bakers raises output from 90 to 100 loaves and total cost from 360 to 420 dollars. What is the marginal cost over that stretch?
6. MC crosses ATC where
Why does the marginal cost curve cross the average total cost curve exactly at ATC's minimum point?
7. Average total cost at a new scale
A firm has fixed costs of 200 dollars and variable costs of 340 dollars when producing 90 units. Compute its average total cost per unit in dollars and write the number with two decimals like 6.00.
8. Computing marginal cost
Total cost rises from 340 to 364 dollars as output expands from 90 to 94 units. What is the marginal cost over this range?
9. Marginal cost meets the average
When marginal cost currently sits above average total cost, what must be happening to average total cost?
10. Average total cost
A firm has fixed costs of 100 dollars and variable costs of 250 dollars when producing 50 units. Compute its average total cost in dollars per unit, and write the number.
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