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# Short run cost function

question
what does production function show
-how tech and inputs combined makes outputs
question
what do shapes of marginal and average curves influence
-shape of short run cost curve or how cost changes as production increases or decreases
question
how do we define cost function
Introducing price of inputs
question
What is fixed in short run cost function
capital
question
how do we know a graph is short run or long run
fixed costs or average fixed costs, no fixed cost in long run
question
how do we define short run
fixed costs
question
3 categories of cost in short run
-define all 3
Toal fixed: exists, K with bar over it, capital
-total variable: price per unit of labor X quantity of labor
-total cost= TFC + TVC
question
AFC equation
total fixed cost/Quatity of units of output
question
AVC equation
Total variable cost /Quatity of units outputs
question
ATC equation
AFC+AVC
question
AFC relationships
decreases decreases as more output is produced
question
TVC
increases as more output produced
question
TFC
stays the same as more output produced
question
Behavior of AVC and
ATC
-both decrease then increase when they reach MC
question
MC
decreases the increases rapidly
question
what is total fixed cost represented by in short run cost function
horizontal line
question
Total VC
-zero at zero level of output
-increase slowly then increase quicker as quantity of output increases
question
total cost behavior in short run cost function
-starts at fixed cost
-same shape as TVC
question
MC behavior
decreases, then increases after minimum, then increases as output increases
question
AFC cost behavior
-decreases as spread over more units
question
what does distance between ATC & AVC represent
fixed costs
question
What happens to ATC and AVC as outputs increase as output increases
distance between them decreases
question
how do we know marginal cost is increasing
question
`relationship between AVC and Avg. Product
-shape of AVC is determined by shape of underlying Avg. product curve in production function
-inverse relationship
-when AP increases, AVC decreases
-When AP decreases, AVC increases
question
How do AVC and MC behave before and after optimal level of output
-before optimal level MC<AVC
-after optimal level MC>AVC
question
what is happening to ATC before it intersects MC
it is decreasing, once it reaches MC ATC begins increasing
question
describe AVC
-sum of all the costs that change as output changes divided by the number of units produced
1 of 27
question
what does production function show
-how tech and inputs combined makes outputs
question
what do shapes of marginal and average curves influence
-shape of short run cost curve or how cost changes as production increases or decreases
question
how do we define cost function
Introducing price of inputs
question
What is fixed in short run cost function
capital
question
how do we know a graph is short run or long run
fixed costs or average fixed costs, no fixed cost in long run
question
how do we define short run
fixed costs
question
3 categories of cost in short run
-define all 3
Toal fixed: exists, K with bar over it, capital
-total variable: price per unit of labor X quantity of labor
-total cost= TFC + TVC
question
AFC equation
total fixed cost/Quatity of units of output
question
AVC equation
Total variable cost /Quatity of units outputs
question
ATC equation
AFC+AVC
question
AFC relationships
decreases decreases as more output is produced
question
TVC
increases as more output produced
question
TFC
stays the same as more output produced
question
Behavior of AVC and
ATC
-both decrease then increase when they reach MC
question
MC
decreases the increases rapidly
question
what is total fixed cost represented by in short run cost function
horizontal line
question
Total VC
-zero at zero level of output
-increase slowly then increase quicker as quantity of output increases
question
total cost behavior in short run cost function
-starts at fixed cost
-same shape as TVC
question
MC behavior
decreases, then increases after minimum, then increases as output increases
question
AFC cost behavior
-decreases as spread over more units
question
what does distance between ATC & AVC represent
fixed costs
question
What happens to ATC and AVC as outputs increase as output increases
distance between them decreases
question
how do we know marginal cost is increasing
question
`relationship between AVC and Avg. Product
-shape of AVC is determined by shape of underlying Avg. product curve in production function
-inverse relationship
-when AP increases, AVC decreases
-When AP decreases, AVC increases
question
How do AVC and MC behave before and after optimal level of output
-before optimal level MC<AVC
-after optimal level MC>AVC
question
what is happening to ATC before it intersects MC
it is decreasing, once it reaches MC ATC begins increasing
question
describe AVC
-sum of all the costs that change as output changes divided by the number of units produced

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