Yr 2 Costs

Question 1

What are the two types of costs?

Answer 1

Variable and fixed

Question 2

Definition for variable costs(couple examples too :))

Answer 2

Costs that vary with output

such as wages, raw materials, utitlity bills

Question 3

Definition of fixed costs(couple examples again;))

Answer 3

Costs that don’t vary with output

such as Rent, salaries, business taxes, interest on loans

Question 4

Equations for AC, MC,AVC, AFC,TFC

Answer 4

AC = TC / Q or AFC + AVC
MC = change in TC / change in Q
AVC = TVC / Q or AC - AFC
AFC = TFC / Q or AC - AVC
TFC = AFC X Q or TC - TVC
TC = TVC + TFC

Question 5

Diagram for MC,AC,TC(draw TC under the MC AC graph)

Answer 5

Fool, tatakae :)

Question 6

MC AC falls and then rises, why?

Answer 6

LODR CBA explaining it either you know it or you dont

Question 7

What are explicit and implicit costs?

Answer 7

Explicit = physical costs, like TFC or TVC
Implicit = stuff like opportunity cost