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Costs

Costs. Short-run costs. Total cost. Total costs for firm X. Output (Q) 0 1 2 3 4 5 6 7. TFC (£) 12 12 12 12 12 12 12 12. Total costs for firm X. Output (Q) 0 1 2 3 4 5 6 7. TFC (£) 12 12 12 12 12 12 12 12. TFC. Total costs for firm X. Output (Q) 0

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Costs

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  1. Costs

  2. Short-run costs Total cost

  3. Total costs for firm X Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12

  4. Total costs for firm X Output (Q) 0 1 2 3 4 5 6 7 TFC (£) 12 12 12 12 12 12 12 12 TFC

  5. Total costs for firm X Output (Q) 0 1 2 3 4 5 6 7 TVC (£) 0 10 16 21 28 40 60 91 TFC (£) 12 12 12 12 12 12 12 12 TFC

  6. Total costs for firm X Output (Q) 0 1 2 3 4 5 6 7 TVC (£) 0 10 16 21 28 40 60 91 TFC (£) 12 12 12 12 12 12 12 12 TVC TFC

  7. Total costs for firm X Diminishing marginal returns set in here TVC TFC

  8. Total costs for firm X Output (Q) 0 1 2 3 4 5 6 7 TVC (£) 0 10 16 21 28 40 60 91 TFC (£) 12 12 12 12 12 12 12 12 TVC TFC

  9. Total costs for firm X Output (Q) 0 1 2 3 4 5 6 7 TVC (£) 0 10 16 21 28 40 60 91 TC (£) 12 22 28 33 40 52 72 103 TFC (£) 12 12 12 12 12 12 12 12 TVC TFC

  10. Total costs for firm X Output (Q) 0 1 2 3 4 5 6 7 TVC (£) 0 10 16 21 28 40 60 91 TC (£) 12 22 28 33 40 52 72 103 TFC (£) 12 12 12 12 12 12 12 12 TC TVC TFC

  11. Total costs for firm X Diminishing marginal returns set in here TC TVC TFC

  12. Short-run costs Marginal cost = TC / Q

  13. Deriving marginal costs QTC MC 0 12 122 2 28 3 33 4 40 5 52 6 72 7 103 10 6 5 7 12 20 31 Costs (£) Q

  14. Deriving marginal costs Costs (£) QTC MC 0 12 122 2 28 3 33 4 40 5 52 6 72 7 103 TC 10 6 5 7 12 20 31 Q

  15. Deriving marginal costs Costs (£) QTC MC 0 12 122 2 28 3 33 4 40 5 52 6 72 7 103 TC 10 6 5 7 12 20 31 DTC = 12 DQ = 1 Q

  16. Deriving marginal costs Diminishing returns set in here Costs (£) QTC MC 0 12 122 2 28 3 33 4 40 5 52 6 72 7 103 TC 10 6 5 7 12 20 31 MC Q

  17. Deriving marginal costs Diminishing marginal returns set in here Costs (£) MC Q

  18. Short-run costs Average cost =TC / Q

  19. Costs (£) Q

  20. QTVC AVC 0 0- 1 10 10 2 16 8 3 21 7 4 28 7 5 40 8 6 60 10 7 91 13 Costs (£) AFC Q

  21. Costs (£) QTVC AVC 0 0- 1 10 10 2 16 8 3 21 7 4 28 7 5 40 8 6 60 10 7 91 13 3 AVC AFC Q

  22. Q TC AC 0 12 1 2222 2 2814 3 33 11 4 4010 5 52 10.4 6 7212 710314.7 Costs (£) AVC AFC Q

  23. Q TC AC 0 12 1 2222 2 2814 3 33 11 4 4010 5 52 10.4 6 7212 710314.7 Costs (£) AC AVC AFC Q

  24. QTC MC 0 12 1 22 2 28 3 33 4 40 5 52 6 72 7103 10 6 5 7 12 20 31 Costs (£) Q

  25. QTC MC 0 12 1 22 2 28 3 33 4 40 5 52 6 72 7103 10 6 5 7 12 20 31 Costs (£) MC Q

  26. QTC MC AC 0 12 1 22 2 28 3 33 4 40 5 52 6 72 7103 Costs (£) - 22 14 11 10 10.4 12 14.7 MC 10 6 5 7 12 20 31 Q

  27. QTC MC AC 0 12 1 22 2 28 3 33 4 40 5 52 6 72 7103 Costs (£) - 22 14 11 10 10.4 12 14.7 MC 10 6 5 7 12 20 31 AC Q

  28. Average and marginal costs MC AC AVC z y x AFC Costs (£) Output (Q)

  29. Long-run costs Long-run costs =TC / Q

  30. Alternative long-run average cost curves LRAC Economies of Scale Costs O Output

  31. Alternative long-run average cost curves LRAC Diseconomies of Scale Costs O Output

  32. Alternative long-run average cost curves LRAC Constant costs Costs O Output

  33. A typical long-run average cost curve LRAC Costs O Output

  34. A typical long-run average cost curve LRAC Economies of scale Constant costs Diseconomies of scale Costs O Output

  35. Long-run average and marginal costs LRMC Economies of Scale Costs LRAC O Output

  36. Long-run average and marginal costs LRMC LRAC Diseconomies of Scale Costs O Output

  37. Long-run average and marginal costs Constant costs Costs LRAC = LRMC O Output

  38. Long-run average and marginal costs LRMC Initial economies of scale, then diseconomies of scale LRAC Costs O Output

  39. Long-run costs Relationship between short-run and long-run AC curves

  40. Deriving long-run average cost curves: factories of fixed size SRAC5 SRAC1 SRAC2 SRAC4 SRAC3 5 factories 4 factories 1 factory Costs 2 factories 3 factories O Output

  41. Deriving long-run average cost curves: factories of fixed size SRAC5 SRAC1 SRAC2 SRAC4 SRAC3 LRAC Costs O Output

  42. Deriving long-run average cost curves: choice of factory size Costs Examples of short-run average cost curves O Output

  43. Deriving long-run average cost curves: choice of factory size LRAC Costs O Output

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