Managerial Economics Class

ISBN: 0-470-00993-4

output Short Run Cost Relations (# ) Economics Q TFC TVC TC MC AFC AVC ATC O 200 TFC = Total Fixed Cost O TVC =Total Variable Cost TC = Total Cost 1 200 50 AFC = Average Fixed Cost AVC = Average Variable Cost ATC = Average Total Cost 2 200 90 MC = Marginal Cost 3 Q = Quantity of Output 200 120 4 200 160 5 200 220 6 200 300 7 200 400 I. Fill in the table. II. Graph the data above (usually, AVC, ATC, MC are graphed on the same set of axes. ) III. When is MC below AVC? Above? Why? When is MC below ATC? Above? Why? Formulae: TC - TFC + TVC MC - ALL (usually, 4Q - 1) AQ AVC _ TVC AFC - TFC Q ATC = ~, or, ATC - AVC + AFC MC, TC, ATC, TVC AVC, TFC AFC