Costs of Production

Average variable cost (AVC) is

• Explicit costs

• Variable cost divided by output

• The increase in output that arises from an additional unit of input

• Costs that do not vary with the quantity of output produced

What does marginal cost (MC) tell us?

• Is cost from fixed input

• Is variable cost

• The increase in output that arises from an additional unit of input

• The increase in total cost that arises from producing an additional unit of output

Fixed cost

• long run ATC rises as output increases

• long run ATC falls as output rises

• costs that do not vary with the quantity of output produced

• long run ATC stays the same as the quantity of output changes

Total Costs / Quantity = _____

• Marginal Cost
• Average Total Cost
• Implicit Cost
• Explicit Cost

Variable Cost/Quantity = _______

• Marginal Variable Cost
• Average Fixed Cost
• Average Variable Cost
• Marginal Total Cost

Change in Total Revenue/Change in Quantity
ΔTR/ΔQ = _____

• Marginal cost
• Marginal Revenue
• Profit
• Marginal Profit

 Total Revenue - Total Cost = _____

• Profit
• Revenue
• Marginal Revenue
• Variable Revenue

Costs that do not change when the quanity of output produced changes?

• Fixed Costs
• Variable Costs
• Explicit Costs
• Implicit Costs

Additional cost associated by producing one additional unit of product.

• Fixed Costs
• Average Costs
• Marginal Costs
• Emplicit Costs

The amount a firm receives for the sale of its output.
P x Q = _____

• Profit
• Total Revenue
• Marginal Revenue
• Average Profit