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Economics: Reading #1: The firms and Market Structures - Coggle Diagram

- - - - Total fixed costs (TFC)
        
        TFC is the cost of inputs that do not vary with the quantity of output and cannot be avoided over the period of analysis.
      - Quasi-fixed cost
        
        Quasi-fixed cost remains constant over some range of output but will increase if output is increase beyond specified quantity.
      - Total variable cost (TVC)
        
        TVC is the cost of all inputs that vary with output over the period of analysis
      - Total cost (TC)
        
        TC is the sum of total fixed cost and total variable cost:
        
        TC = TFC + TVC
      - Proportion
        
        Marginal costs (MCs)
        
        As Q rises -> more units of labor needed -> MC initially decreases due to specialization but eventually increases due to diminishing marginal product
        => J-shaped MC curve
        
        Average fixed costs (AFC)
        
        As Q rises -> TFC are spread over more and more units -> AFC falls at a decreasing rate
        => downward slpoing AFC curve
        
        Average variable costs (AVC)
        
        Like MC, AVC is shaped like a "U-curve" due to diminishing marginal product
        
        Average total costs (ATC)
        
        As Q rises, ATC initially declines due to the fall in AFC and AVC, but eventually increases due to the effect to falling AFC is offset by the increase in AVC -> U-shaped ATC curve
        
        Note
        
        MC is below AVC/ATC -> AVC/ATC falls
        
        MC is above AVC/ATC -> AVC/ATC rises
        
        Giao của MC & ATC là Respective minium point
        
        Giao của MC & AVC là Respective minium point
  - - - Definition
        
        sum of individual units sold time their respective price
      - Formula
    - - Definition
        
        total revenue divided by quantity
      - Formula
    - - Definition
        
        the increase in total revenue form selling one more unit
      - Formula
        
        elasticity: độ co giãn
    - - Demand fuction:
        
        Qd = a - bP -> P = (a/b) - (1/b)*Qd
        => Slope of demand curve = -1/b
      - TR fuction:
        
        TR = Qd x P = (a/b)*Qd - (1/b)*Qd^2
      - MR fuction:
        
        MR = d(TR) / d(Q) = (a/b) - (2/b)*Qd
        => Slope of MR function = -2/b
      - The MR and demand curve starts at the same point on the y-axis.
        
        Slope of the MR curve is 2 times as much as that of the demand curve.
    - - Under perfect competition
        
        The firm has no pricing power
        -> they accept market price for any level of output quantity
        -> perfectly elastic demand curve for this firm
        -> no need to lower P to sell more Q
        
        Elasticity = infinite
        -> (1/elasticity) = 0
        -> MR = P = AR
        
        TR increases when increase Q
      - Under imperfect competition
        
        The firm has at least som control over price
        -> downward sloping demand curve
        
        Elasticity < 0
        -> (1 + 1/ elasticity) < 1
        -> MR < P = AR
        
        *TR reaches its maximum at the point demand elasticity = -1*
        -> MR = 0