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Costs
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Short-run costs Total cost
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Total costs for firm X Output (Q) 1 2 3 4 5 6 7 TFC (£) 12
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Total costs for firm X Output (Q) 1 2 3 4 5 6 7 TFC (£) 12 TFC
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Total costs for firm X TFC Output (Q) 1 2 3 4 5 6 7 TFC (£) 12 TVC (£)
1 2 3 4 5 6 7 TFC (£) 12 TVC (£) 10 16 21 28 40 60 91 TFC
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Total costs for firm X TVC TFC Output (Q) 1 2 3 4 5 6 7 TFC (£) 12 TVC
1 2 3 4 5 6 7 TFC (£) 12 TVC (£) 10 16 21 28 40 60 91 TVC TFC
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Total costs for firm X TVC Diminishing marginal returns set in here
TFC
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Total costs for firm X TVC TFC Output (Q) 1 2 3 4 5 6 7 TFC (£) 12 TVC
1 2 3 4 5 6 7 TFC (£) 12 TVC (£) 10 16 21 28 40 60 91 TVC TFC
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Total costs for firm X TVC TFC Output (Q) 1 2 3 4 5 6 7 TFC (£) 12 TVC
1 2 3 4 5 6 7 TFC (£) 12 TVC (£) 10 16 21 28 40 60 91 TC (£) 12 22 28 33 40 52 72 103 TVC TFC
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Total costs for firm X TC TVC TFC Output (Q) 1 2 3 4 5 6 7 TFC (£) 12
1 2 3 4 5 6 7 TFC (£) 12 TVC (£) 10 16 21 28 40 60 91 TC (£) 12 22 28 33 40 52 72 103 TC TVC TFC
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Total costs for firm X TC TVC Diminishing marginal returns set in here
TFC
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Short-run costs Marginal cost = TC / Q
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Deriving marginal costs
Q TC MC 10 6 5 7 12 20 31 Q
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Deriving marginal costs
Q TC MC TC 10 6 5 7 12 20 31 Q
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Deriving marginal costs
Q TC MC TC 10 6 5 7 12 20 31 DTC = 12 DQ = 1 Q
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Deriving marginal costs
Q TC MC TC 10 6 5 7 12 20 31 Diminishing returns set in here MC Q
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Deriving marginal costs
MC Diminishing marginal returns set in here Q
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Short-run costs Average cost =TC / Q
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Costs (£) Q
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Costs (£) Q TVC AVC AFC Q
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Costs (£) Q TVC AVC 3 AVC AFC Q
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Costs (£) Q TC AC AVC AFC Q
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Costs (£) Q TC AC AC AVC AFC Q
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Q TC MC 10 6 5 7 12 20 31 Costs (£) Q
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Q TC MC 10 6 5 7 12 20 31 Costs (£) MC Q
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Costs (£) Q TC MC AC - 22 14 11 10 10.4 12 14.7 10 6 5 7 12 20 31 MC Q
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Costs (£) Q TC MC AC - 22 14 11 10 10.4 12 14.7 10 6 5 7 12 20 31 MC AC Q
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Average and marginal costs
MC Average and marginal costs AC AVC AFC Costs (£) z y x Output (Q)
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Long-run costs Long-run costs =TC / Q
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Alternative long-run average cost curves
LRAC Economies of Scale Costs O Output
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Alternative long-run average cost curves
LRAC Diseconomies of Scale Costs O Output
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Alternative long-run average cost curves
Constant costs Costs LRAC O Output
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A typical long-run average cost curve
LRAC Costs O Output
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A typical long-run average cost curve
LRAC Economies of scale Constant costs Diseconomies of scale Costs O Output
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Long-run average and marginal costs
Economies of Scale Costs LRMC LRAC O Output
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Long-run average and marginal costs
LRMC LRAC Diseconomies of Scale Costs O Output
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Long-run average and marginal costs
Constant costs Costs LRAC = LRMC O Output
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Long-run average and marginal costs
LRMC Initial economies of scale, then diseconomies of scale LRAC Costs O Output
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Relationship between short-run and long-run AC curves
Long-run costs Relationship between short-run and long-run AC curves
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Deriving long-run average cost curves: factories of fixed size
SRAC4 SRAC5 SRAC1 SRAC2 SRAC3 5 factories 4 factories 1 factory Costs 2 factories 3 factories O Output
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Deriving long-run average cost curves: factories of fixed size
SRAC1 SRAC5 SRAC2 SRAC4 SRAC3 LRAC Costs O Output
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Deriving long-run average cost curves: choice of factory size
Costs Examples of short-run average cost curves O Output
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Deriving long-run average cost curves: choice of factory size
LRAC Costs O Output
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