3.3.2 Flashcards
1
Q
Formula for total cost
A
FC + TVC
2
Q
Formula for total variable cost
A
VC * Output
3
Q
Formula for average variable cost
A
TVC / Output
4
Q
Formula for average fixed cost
A
FC / Output
5
Q
What’s marginal cost?
A
The addition to total cost from the additional production of a unit.
6
Q
What’s the relationship between SRAS and LRAS?
A
SRAS shows average costs when only the variable factors of production can be utilised.
LRAS shows average costs when all factors of production can be utilised.
7
Q
What’s diminishing marginal productivity?
A
The concept as more of the variable factors of production are added to the fixed factor of production each additional unit of of the variable input will decrease
