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# Ch. 5.3 Notes: Supply and the Role of Cost - PowerPoint PPT Presentation

Ch. 5.3 Notes: Supply and the Role of Cost. Businesses have the following costs to pay every month as they run their business A. Fixed Costs > costs that do not vary/change every month 1. Example > rent, taxes, interest on

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### Ch. 5.3 Notes: Supply and the Role of Cost

• Businesses have the following costs to pay every month as they run their business

A. Fixed Costs > costs that do not

vary/change every month

1. Example > rent, taxes, interest on

loans, payment on loans

B. Variable Costs > cost that change according

to performance or output of business every

month

1. Example > labor, electricity, other

utilities, supplies

C. Total Costs = F.C. + V.C. they run their business

D. Example:

Rent = \$1200

Supplies = \$300

Payment on business loan = \$200

Workers/Labor = \$800

Utilities = \$150

1. What is F.C.?

2. What is V.C.?

3. What is T.C.?

E. Marginal Costs > cost of producing they run their business

one additional unit of a product

1. Example: To make 10 burgers costs

\$15. If they make 11 burgers it costs

\$16. What is M.C. of 11th burger?

II. Measuring Revenue

A. Total Revenue > money going to