ECON 201 Chapter 13 Part 2 Notes
ECON 201 Chapter 13 Part 2 Notes ECON 2010
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This 2 page Class Notes was uploaded by Kathryn Catton on Thursday April 7, 2016. The Class Notes belongs to ECON 2010 at a university taught by Dr. Zegeye in Winter 2016. Since its upload, it has received 30 views.
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Date Created: 04/07/16
Unit Costs and their graphs: AFC= TFC/Q, This is spreading costs over units produced (pricing purposes) AVC= TVC/Q or can be simplified to be VC times Wage/ Q or further to Wage/Average Product of Labor ATC= TC/Q or further to AFC + AVC. Cost per unit to produce, finds price. MC= (additional cost by increasing production by _ units) Change in Total Variable Cost/ Change in Quantity Change in Labor times Wage/ Change in Quantity OR W/MPL AVC When MC < AVC, AVC decreases. MC = AVC @ RED DOT MC > AVC above red dot, AVC increases Red Point is minimum point for AVC ATC When MC < ATC, left of ORANGE DOT, ATC decreases MC = ATC @ ORANGE DOT MC > ATC, above orange dot, ATC increases Orange Point is minimum point for ATC Relationship between APL/MPL and AVC/MC: They are mirror images of each other. They have inverse relationships with one another. Whenever MPL increases, MC is decreasing. When comparing both charts you can notice the directions each curves go in relation to the opposite graph. Rectangular Hyperbola= Q decreases, AFC increases Division of labor, specialization (W/APL)
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