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PRODUCTION THEORY (COST (Why ATC is U-shaped? (ATC is downward slopping…
PRODUCTION THEORY
COST
Fixed cost
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AFC = FC / Q
Higher quantity, lower AFC
Variable cost
Higher quantity, higher cost
AVC = VC / Q
Higher quantity, higher AVC
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A firm is an organization that comes into being when a person or a group of people decides to produce a good or service to meet demand.
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