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formulas for econ
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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
ID
73922
Card Set
formulas for econ
Description
for chapter 12
Updated
2011-03-20T00:50:27Z
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