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3. Value of A? Need to find what? PowerPoint Presentation

3. Value of A? Need to find what?

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3. Value of A? Need to find what?

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FC

VC

TC

60

30

90

= 90

60

60

50

=20

110

#4

60

60

120

3. Value of A? Need to find what?

Need TC…..

Use AFC x 1 and AVC x 1 to get FC and VC = TC

Fill in rest of FC, then identify that at Q3 AVC x Q = VC …

So….20 x 3 = VC of 60

4. Total Costs of 3rd unit? Need to find what?

5. Value of B? ……..need to find what?

TC at Q2….same process as above

If TC/Q = ATC; ATC x Q = TC……If VC/Q = AVC; AVC x Q = VC ……difference between ATC and AVC = AFC…so that distance x Q = FC

6. Total fixed costs

7. Total variable cost

8. Total Costs

A’

A

B

P0

A

Fixed Costs

Total Costs

P1

D

C

P3

Variable Costs

Q1

Q0

- Avg. Product = Q/Input
- As MP rises, Avg. Prod rises….
- Ex:

15

5

15

15

4

2

15

15

4

15

7

15

15

A. Identify $ value of fixed costs and give one example of fixed cost

D. pt. at which DMP(returns) begin. Explain

B. VC for 4th unit and give one example of VC

=MC is falling through Q3 so MP must be rising. From Q3 to Q4: MC begins to rise which means MP begins to fall

= if TC is 30 and FC is 15, then VC = 15

C. MC for 5th unit

= change TC / change Q