What is Marginal Revenue?
- It is the additional income from selling and additional unit of good.
What is Fixed Cost?
- It is cost that does not change no matter how much of a good is produced
- Ex: Salary, Rent, and Insurance
What is Variable Cost?
- Is is the cost that rises or falls depending upon how much is produced.
Abbreviations
Q= Quantity
TFC= Total Fixed Cost
TVC= Total Variable Cost
TC= Total Cost
MC= Marginal Cost
AFC= Average Fixed Cost
AVC= Average Variable Cost
ATC= Average Total Cost
Equations
- TFC + TVC = TC
- AFC + AVC = ATC
- TFC/Q = AFC
- TVC/Q =AVC
- TC/Q = ATC
- AFC x Q = TFC
- AVC x Q = TVC
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