formulas for econ

Profit is

total revenue - total cost
economic profit is

exlicit and implicit revenue - explicit and implicit cost
total cost is

total cost = fixed cost + variable cost
Average fixed costs (AFC)

equals fixed cost divided by quantity produced AFC = FC/Q
Average Variable costs AVC

equals variable cost divided by quanity produced AVC = VC/Q
Average total costs (ATC)

equals total cost divided by quantity produced ATC = TC/Q or ATC = AFC + AVC
Marginal cost (MC)

is the increase in total cost when output increases by one unit, MC = ^TC/^Q
the relationship between marginal cost and average cost
if MC > ATC,

then ATC is rising
the relationship between marginal cost and average cost
if MC > AVC

then AVC is rising
the relationship between marginal cost and average cost
If MC < ATC then

ATC is falling
the relationship between marginal cost and average cost
if MC < AVC then

then AVC is falling
the relationship between marginal cost and average cost
if MC = AVC and MC = ATC then

then AVC and ATC are at their minimum points

Author

ndumas2

73922

Card Set

formulas for econ

Description

for chapter 12

Updated

2011-03-20T00:50:27Z

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