T3 Cost of production Flashcards
1
Q
How was average cost calculated (AC)
A
Average cost is equal to the cost of each unit of production.
AC = TC/Q
2
Q
How was marginal cost calculated. MC
A
Marginal cost is the difference in cost for each additional unit of production.
MC = ^TC/^Q
3
Q
Define fixed costs
A
Fixed costs are costs associated with all fixed inputs
4
Q
Define variable costs
A
Costs associated with all variable inputs
5
Q
What is total cost equal to
A
Total cost is the sumOf all fixed and variable costs
TC = FC + VC
6
Q
What are average fix costs. AFC
A
The fixed cost for each unit of production.
AFC = FC/Q
7
Q
Define average variable cost
A
The variable cost for each unit of production.
AVC=VC/Q
