formulas for econ
Home > Flashcards > Print Preview
The flashcards below were created by user
ndumas2
on
FreezingBlue Flashcards. What would you like to do?

Profit is
total revenue  total cost

economic profit is
exlicit and implicit revenue  explicit and implicit cost

total cost is
total cost = fixed cost + variable cost

Average fixed costs (AFC)
equals fixed cost divided by quantity produced AFC = FC/Q

Average Variable costs AVC
equals variable cost divided by quanity produced AVC = VC/Q

Average total costs (ATC)
equals total cost divided by quantity produced ATC = TC/Q or ATC = AFC + AVC

Marginal cost (MC)
is the increase in total cost when output increases by one unit, MC = ^TC/^Q

the relationship between marginal cost and average cost
if MC > ATC,
then ATC is rising

the relationship between marginal cost and average cost
if MC > AVC
then AVC is rising

the relationship between marginal cost and average cost
If MC < ATC then
ATC is falling

the relationship between marginal cost and average cost
if MC < AVC then
then AVC is falling

the relationship between marginal cost and average cost
if MC = AVC and MC = ATC then
then AVC and ATC are at their minimum points