0
The Average Total Cost (ATC) curve is above the Average Variable Cost (AVC) curve because the ATC is composed of the AVC and the AFC (average fixed cost curve). The AVC curve starts out low at low levels of output, and eventually, as more of the variable unit is added, AVC begins to slop upward. Conversely, AFC starts out higher, but as more units are produced, the fixed costs are spread out over more units so the AFC curve is actually a downward sloping straight line. When you add the AVC and AFC at each level of production and graph the result, you are given the ATC line which is a U-shaped curve above the AFC & AVC. An example of VC would be labor. In the short-run where plant size is fixed, in order to produce more units, you would have to hire more labor. As you add workers, you will initially see a productivity gain, but as more and more workers are added, their marginal output will fall. FC is simple. Suppose you have a factory that costs you $100/year to operate. If you produce only 1 unit that year, your fixed costs are spread out over the single unit, so $100 AFC. Now suppose you up production to 3 units and AFC falls to $33.34/unit. Go even further and produce 25 units and now AFC is $4/unit. Graph this line. The sum of these 2 curves, AVC & AFC, equals ATC.
Add your answer:
Earn +20 pts
What is average waiting time in round robin scheduling in operating system?
the total time that staying in the queue that wait for process of each process.
One competitor in a 100-mile bicycle race took a total of 5 hours to complete the course His average speed in the morning was 23 miles per hour His average speed in the afternoon was 13 miles per ho?
let m = hrs in morning let a = hrs in afternoon m+a=5 23m+13a=100 solve
What is Total outstanding authorization amount?
A "Total outstanding authorization amount" is an amount (usually money) that is with held from the current running total on the account. Normally you'll see this on a bank account or credit card transaction that is pending.
When did the concept of total theater begin?
The creator of total theatre was Steven Berkoff and he began in the 1930's, so the 1930's. :)
How many books has Orson Scott Card Written total?
Orson Scott Card has written 50 books in total. And they are all amazing!!!
6 If the average total cost curve is falling what is necessarily true of the marginal cost curve If the average total cost curve is rising what is necessarily true of the marginal cost curve?
When average total cost curve is falling it is necessarily above the marginal cost curve. If the average total cost curve is rising, it is necessarily below the marginal cost curve.
Does marginal cost curve always intersect the average cost curve at the average cost curve's lowest point?
When the marginal cost is below the average total costs or the average variable costs,then the AC would be declining.When marginal cost is above the average cost then the average cost would be increasing.Therefore the marginal cost should intersect with the average cost at the lowest point in order to pull the average cost upwards.
The long run average total cost curve?
The long run average total cost curve is the lowest average total cost for producing each level of output. It depicts the per unit cost of producing a good or service in the long run when all inputs are variable.
What is the relationship between total cost curve and variable cost curve?
estimated cost
What is the formula to find the average variable cost?
Average Variable Cost = Total Variable Cost/ Quantity Average Cost = Average Fixed Cost + Average Variable Cost Average Cost = Total Cost/Quantity
Why does the marginal cost curve cut through the average variable cost curve exactly at the minimum of the average variable cost curve?
Marginal cost curve cuts average cost (variable or total cost) at its minimum simply to portray the law of variable proportions. The idea is as labor is increased with capital being fixed, productivity increases upto a point and then decreases and later becomes negative. To relate the same productivity with average cost function, the average cost first decreases , reaches a minimum and then increases. Now marginal cost is just a change in the total cost. Logic says that when MC is less than AC productivity is favourable, thus cost is falling. When MC is more than AC productivity is not favourable and thus the rising portion of the cost curve. When MC = AC , the productivity that was reducing the average cost per unit has maximized and from then on starts rising cost(or decreasing productivity). That is the only point where they can intersect.
What is the difference between average total costs and average variable costs?
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
What is the relationship between marginal cost and average cost curves?
Margianal cost curve crosses the average total cost curve at the lowest point on the average total cost curve to be socially and ecomonical efficient.
Is the area under the marginal cost curve equal to the total variable cost?
yes
What does the vertical distance between the fixed Cost and the total cost curve represent?
total variable cost
What effect will an increase in output have on average fixed average variable and average total cost?
average fixed will go down, average variable will remain the same, and average total will go down.
What is cost What is the difference between total cost and average cost?
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
