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Economics (TC/MC/AFC/AVC/ATC (MC = Marginal Cost (Marginal is the rate of…
Economics
TC/MC/AFC/AVC/ATC
TC = Total Cost
MC = Marginal Cost
Marginal is the rate of change with respect to q
FC = Fixed Cost
AFC = Average fixed Cost
VC = Variable cost
AVC = Average variable cost
ATC = Average Total cost
Here average means per unit
So we just divide by q
Long-Term Equilibrium
Cost of production = Money from sales
Profit = 0
Terms
LRAC = Long run average cost
Total cost div # of units
price (p) = min LRAC
dL/dq = 0
Use new p to find q total Q form Q = f(p)
div Q by q to find number of firms
Perfectly Competitive Market
Compensating Variation
Returns of scale