Profit-maximizing point
The profit maximizing point for any firm is where MR = MC. This stays consistent among all firms! For example, if we were given the … Read More
Monopolies
Imagine that you live on an island, and the only way anyone on that island can get gasoline to power their cars is through you. … Read More
Competitive Firms
Imagine you run a lemonade stand in Lemonville, a town with thousands of competing lemonade stands. Each lemonade stand sells the same thing: lemonade. A … Read More
How to interpret per-unit cost graph
Question: What is the total cost of 5 units? Based on this graph… …how could we answer this question? First, let’s set up our equation … Read More
Average Total Cost
To calculate average total cost (ATC), we’ll use the following formula: ATC = TC / Quantity We have the following total costs… Output Variable Cost … Read More
Average Variable Cost
To calculate average variable cost (AVC), we’ll use the following formula: AVC = VC / Quantity We have the following variable costs… Output Variable Cost … Read More
Average Fixed Cost
To calculate average fixed cost (AFC), we’ll use the following formula: AFC = FC / Quantity We have the following fixed costs… Output Variable Cost … Read More
Total cost curves
Total cost curves include VC, FC, and TC. We calculated these in the following table: Output Variable Cost Fixed Cost Total Cost 0 $0 $10 … Read More
Marginal Cost
Your marginal cost (MC) is the additional cost of each unit of output in relation to your total cost. Marginal cost determines the best way … Read More
Total Cost
Total costs (TC) are your fixed costs plus your variable costs. We can see that the total cost for each unit of output is simply … Read More