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Costs - Coggle Diagram

- - - - Above the AVC curve
    - - MC falls, ATC falls
        
        When MC < ATC, ATC falls
        
        Each additional unit costs less than the average, so it pulls the average down
      - MC rises, ATC rises
        
        When MC > ATC, ATC rises
        
        Each additional unit costs more than the average, so it pushes the average up
      - When MC = ATC, ATC is at its minimum point
        
        This is where the marginal cost intersects the ATC curve
  - - - Slopes downwards greatly and then continues sloping downwards gradually
  - - - Below the ATC curve
- - - - Technical Economies
      - Marketing Economies
      - Purchasing Economies
      - Administrative Economies
      - Managerial Economies
      - Research and Development Economies
      - Risk-Bearing Economies
      - Financial Economies
  - - - Local Suppliers
      - College Courses
      - Research Centres
      - Locally Skilled Labour Force
      - Infrastructure Improvements
- - - - U1 - U0 = MC
      - The marginal cost of the second unit is the difference between the total cost of producing one unit and the total cost of producing two units
        
        U2 - U1= MC
        
        The marginal cost of the third unit is the difference between the total cost of producing two units and the total cost of producing three units
        
        U3 - U2 = MC
- - - - Fixed factor: Oven (land/machinery)
      - Variable factor: Workers
      - Marginal returns: The change in output from adding one more worker
        
        Diminishing marginal returns: When this change starts to fall
      - The law of diminishing returns helps firms understand optimal staffing levels - too many workers with limited equipment leads to lower productivity per worker, even if total output keeps rising for a while