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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

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Ch. 5.3 Notes: Supply and the Role of Cost


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slide2
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

slide3
C. Total Costs = F.C. + V.C.

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.?

slide4
E. Marginal Costs > cost of producing

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

business (quantity sold x price)

slide5
B. Marginal Revenue > Revenue

associated with making one more sale

1. Example : TR for selling 10 burgers is

$30. TR for selling 11 burgers is $33.

What is M.R.?