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Production Theory (:small_orange_diamond: Total Cost (TC) = Fixed Cost…
Production Theory
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:star: 2 Types of Cost
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- do not require a cash outlay
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- The relationship that shows the quantity of input used to produce a good and the quantity of output of that good to maximize the cost.
- The increase in output arising from an additional unit of that input, holding all other inputs constant.
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:blue_car: ATC is the addition of AFC and AVC. From the graph, we can see that AFC is higher than AVC. That's why the ATC is downward sloping. While, when the AVC is higher than AFC, ATC will be upward sloping.
