AP Microeconomics / Unit 3: Production, Cost, and the Perfect Competition Model
3.2 Short-Run Production Costs
Notes
- $TC=FC+VC$; $\displaystyle ATC=\frac{TC}{Q}$, $\displaystyle AVC=\frac{VC}{Q}$, $\displaystyle AFC=\frac{FC}{Q}$; $\displaystyle MC=\frac{\Delta TC}{\Delta Q}$.
- MC crosses AVC and ATC at their minimums.
- AFC keeps falling as output rises.
Practice
Rent on a factory is a:
Doesn't change with output.
$TC$ goes from 100 to 115 when $Q$ goes from 10 to 11. MC:
$115-100$.
MC crosses ATC at:
When MC < ATC, ATC falls.
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