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Economics 3.3.2 - Coggle Diagram
Economics 3.3.2
fixed costs
do not vary with output in SR
e.g. rent
the higher the fixed costs, the more revenue is needed to break even
marketing costs
research costs
insurance
an increase in TFC causes a shift upwards of ATC but not AVC
variable costs
costs that vary with output in SR
AVC
TVC / Q
wages
raw materials
an increase in TVC causes a shift upwards of AVC and ATC and MC
shifts in short run costs
lower unit costs
a fall in the exchange rate means more raw materials can be imported at the same price
advances in technologies
entry of new producers
subsides and taxes
ways government policy can change costs
changes to VAT
environmental taxes e.g. carbon tax
changes to National Minimum wage
increase in government subsidies can reduce costs
product
total product
total output
average product
total output/ number of workers
same as productivity
marginal product
extra output produced when another worker is employed