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TOPIC 6 : PRODUCTION COST - Coggle Diagram
TOPIC 6 : PRODUCTION COST
SHORT RUN PRODUCTION COST IN MICROECONOMICS
IMPLICIT COST VS EXPLICIT COST
SHORT RUN PRODUCTION COST FORMULA
TOTAL COST
TC = TFC + TVC
AVERAGE VARIABLE COST
AVC = TVC/Q
TOTAL VARIABLE COST
TVC = TC - TFC
AVERAGE FIXED COST
AFC = TFC/Q
AVERAGE COST
AC = TC/Q
MARGINAL COST
MC = CHANGES IN TC /
CHANGES IN Q
TOTAL FIXED COST
TFC = TC - TVC
DEFINITION
SHORT RUN PRODUCTION COST CURVE
TC
AFC
TVC
AVC
TFC
AC
MC
LONG RUN PRODUCTION COST IN MICROECONOMICS
RELATIONSHIP BETWEEN SRAC VS LRAC
LRAC CURVE
DEFINITION
ECONOMIES OF SCALE & DISECONOMIES OF SCALE
IMPACTS OF ECONOMIES OF SCALE & DISECONOMIES OF SCALE
FACTORS THAT CONTRIBUTE ECONOMIES OF SCALE & DISECONOMIES OF SCALE
DISECONOMIES OF SCALE
INTERNAL FACTORS
Labour Diseconomies
Management Problem
Technical Difficulties
Marketing diseconomies
increase in input cost
EXTERNAL FACTORS
Reduce factors of production
wages differential
social cost
Concentration problem
ECONOMIES OF SCALE
INTERNAL FACTORS
Labour Speacilaization
Financial economies
Efficiency of equipment use
Transport economies
Management economies
EXTERNAL FACTORS
Economies Of government action
Economies of concentration
Economies of information
Economies of Marketing