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Analysis of Costs, :, image - Coggle Diagram
Analysis of Costs
FC AND VC
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Fixed Cost: the expense that must be paid even when no output is produced. It does not vary with output.
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AVERAGE COST
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AC and MC relation:
1) When MC is below AC, it pushes AC down
2) When MC = AC, AC is at its min and stays Constant
3) When MC is above AC, it is pulling AC up
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as a firm sells more output, it can spread its overhead cost over more and more units.
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Production and Costs
Production Function:
Describes the relationship between the inputs into the production process and the maximum resulting output.
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