Total Cost Curves in the SR (TFC, TVC, TC)

Question 1

describe TFC graph

Answer 1

horizontal constant line
(constant over a range of output)

Question 2

TFC AND TVC influenced heavily by

Answer 2

LODR

Question 3

Draw TVC curve

Answer 3

yes or no

Question 4

assume wages only VC in SR for firm so intially when we hire workers productivity gains are to be had ecplain the shape of the first section of the graoh

Answer 4

rising as VC will be high to be able to get initial amount of labour /pay workers we hired

Question 5

are workers are productive thereofre

Answer 5

we dont need to increase wages to get a greater increase in output

Question 6

when curve gets slightkly shallower/horizontal what do we see

Answer 6

productivity gains

output increasing faster than costs as intiially theres underutilised capital and specialiosation gains to be made by adding more workere into prod process

Question 7

More
productivity measn

Answer 7

output increase mich greater than variable (costs)
thereofre TVC not increasing that much

Question 8

when do we start seeing LODR

Answer 8

Whn curve gets steeper

Question 9

explain the LODR on TVC graph

Answer 9

overutil of capital
FFOP becom econstraint on production so workers start to loose productivity

prod falls inr epsect to workers that came before
terefore costs begin to rise quicker than output

Question 10

draw teh TVC and split it into three sections

Answer 10

increasing returns to labour
LODR

Question 11

draw teh TVC and split it into three sections

Answer 11

increasing returns to labour
LODR

Question 12

TC equation

Answer 12

TFC +tvc

Question 13

how doesTC curve look

Answer 13

exactly like TVC but starts at TFC

Question 14

Why does TC curve start in this area

Answer 14

because TVC =0
and fc will be constant so looks same as TVC

Question 15

What does vertical distance between TC and TVC represent

Answer 15

TFC