Midterm 1 Equations

Question 1

Total Cost

Answer 1

Fixed Cost + Variable Cost = Total Cost

Question 2

Fixed Cost

Answer 2

Costs that remain constant as a firm’s level of output changes

Question 3

Variable Cost

Answer 3

Costs that change was a firm’s level of output changes

Question 4

Marginal Cost

Answer 4

An increase in total cost resulting from producing another unit of output

MC = △TC / △Q

Question 5

Average Total Cost

Answer 5

Total cost divided by the quantity of output produced

ATC = TC / Q

Question 6

Average Fixed Cost

Answer 6

Fixed Cost divided by the quantity of output produced

AFC = FC / Q

Question 7

Average Variable Cost

Answer 7

Variable cost divided by the quantity of output produced

Variable Cost / Q

Question 8

What relationship must hold true if a person is minimizing cost?

Answer 8

MP[L] / w = MP[K] / r

Question 9

Elasticity

Answer 9

Elasticity = %Q / %P

%Q = ∆ Q/ Q

%P = ∆P / P

Question 10

Midpoint Formula

Answer 10

Price elasticity of demand

Q2-Q1)/((Q2+Q1)/2) ÷ (P2-P1)/((P2+P1)/2