7b – Short Run Cost Curves
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7b
Short Run Cost Curves
•TC
•TVC
•TFC
•ATC
•AVC
•AFC
•and MC
•Be able to:
•Define
•Examples
•Calculate
•Draw
•Describe graph shapes
7b Short Run Cost Curves
Be able to find:
•TC
•TVC
•TFC
•ATC
•AVC
•AFC
•MC
On a:
•Table of data
•Graph with
numbers
•Graph with
letters using
geometry
See Yellow Pages
7b – Short Run Costs
Total Cost Curves
Average Cost Curves
and MC
1. Costs that do not change with
output are called:
1.
2.
3.
4.
Marginal costs
Average costs
Variable costs
Fixed costs
1. Costs that do not change with
output are called:
1.
2.
3.
4.
Marginal costs
Average costs
Variable costs
Fixed costs
2. The variable cost curve represents
the expenditures on______ to
produce a given quantity of ______.
1.
2.
3.
4.
output; output
fixed cost; input
variable cost; output
variable cost; input
2. The variable cost curve represents
the expenditures on______ to
produce a given quantity of ______.
1.
2.
3.
4.
output; output
fixed cost; input
variable cost; output
variable cost; input
Define, Draw, Describe, Examples:
(see Yellow Pages lesson 7b)
•
•
•
•
•
Fixed costs
Variable costs
Total costs (TFC, TVC, TC)
Average costs (AFC, AVC, ATC)
Marginal cost (MC)
3. The economic information
that MC gives us is:
1. The value of all resources used in the
production process
2. The amount by which total cost increases
when one more is produced
3. The amount that fixed cost increases when
one more is produced
4. The amount that profits go up when one more
is produced
3. The economic information
that MC gives us is:
1. The value of all resources used in the
production process
2. The amount by which total cost increases
when one more is produced
3. The amount that fixed cost increases when
one more is produced
4. The amount that profits go up when one more
is produced
4. When marginal productivity (MP) is
at its maximum, which is true?
1.
2.
3.
4.
Profit is at a maximum
MC is at a minimum
AVC is at a minimum
The firm is profitable
4. When marginal productivity (MP) is
at its maximum, which is true?
1.
2.
3.
4.
Profit is at a maximum
MC is at a minimum
AVC is at a minimum
The firm is profitable
5. At low levels of
production, MC costs fall as
output is increased because:
1. Firms are increasing plant capacity
2. Teamwork and specialization
3. The existing workers are getting in each others
way
4. The plant is getting less crowded
5. TEAM At low levels of
production, MC costs fall as
output is increased because:
1. Firms are increasing plant capacity
2. Teamwork and specialization
3. The existing workers are getting in each others
way
4. The plant is getting less crowded
6. The slope of the TC curve (and the
TVC curve) at any point is:
1.
2.
3.
4.
The MC
The TFC
The AVC
increasing at first then decreasing
6. TEAM The slope of the TC curve (and
the TVC curve) at any point is:
1.
2.
3.
4.
The MC
The TFC
The AVC
increasing at first then decreasing
7. Which of the following curves is
not U-shaped?
1.
2.
3.
4.
ATC
AFC
AVC
MC
7. Which of the following curves is
not U-shaped?
1.
2.
3.
4.
ATC
AFC
AVC
MC
8. Which is correct?
A
1. A
2. B
3. C
B
C
8. Which is correct?
A
1. A
2. B
3. C
B
C
Notice the error in this graph taken
from one of the video lecture quizzes.
Error: the ATC
and AVC
should be
getting closer
together
9. Which is CORRECT?
A
1. A
2. B
3. C
B
C
9. Which is CORRECT?
1. A A
2. B
3. C
B
C
0%
C
0%
B
A
0%
MC should
cross ATC and
AVC at their
lowest points
If your GPA = 3.0 and your
marginal grade point this
semester (MGP) is 2.0,
what will happen to your
GPA?
So, if MC is below ATC, then
ATC will decline.
And, if MC is below AVC,
then AVC will decline.
If your GPA = 3.0 and your
marginal grade point this
semester (MGP) is 4.0,
what will happen to your
GPA?
So, if MC is above ATC, then
ATC will rise.
And, if MC is above AVC,
then AVC will rise.
10. MC will increase for all of the
following except:
1.
2.
3.
4.
Higher rent costs
Higher labor costs
Higher energy cost
Higher material costs
10. MC will increase for all of the
following except:
1.
2.
3.
4.
Higher rent cost
Higher labor costs
Higher energy costs
Higher material costs
7b
Short Run Cost Curves
• TC
• TVC
• TFC
• ATC
• AVC
• AFC
• and MC
Be able to:
• Calculate
• Define
• Draw
• Describe graph shapes
• Give Examples
7b
Short Run Cost Curves
• TC
• TVC
• TFC
• ATC
• AVC
• AFC
• and MC
Be able to find on a:
• Table
• Graph with numbers
• Graph with letters
using geometry
7b
Total Cost Curves
Average Cost Curves
and MC
11. If quantity = 3, what is TC?
1.
2.
3.
4.
5.
$ 24
$ 48
$ 72
$ 144
Cannot be found
11. If quantity = 3, what is TC?
1.
2.
3.
4.
5.
$ 24
$ 48
$ 72
$ 144
Cannot be found
12. If quantity = 3, what is TFC?
1.
2.
3.
4.
5.
$ 24
$ 48
$ 72
$ 144
Cannot be found
12. If quantity = 3, what is TFC?
1.
2.
3.
4.
5.
$ 24
$ 48
$ 72
$ 144
Cannot be found
13. If quantity = 3, what is TVC?
1.
2.
3.
4.
5.
$ 24
$ 48
$ 72
$ 144
Cannot be found
13. If quantity = 3, what is TVC?
1.
2.
3.
4.
5.
$ 24
$ 48
$ 72
$ 144
Cannot be found
14. If quantity = 3, what is ATC?
1.
2.
3.
4.
5.
$0
$ 12
$ 16
$ 48
Cannot be found
14. If quantity = 3, what is ATC?
1.
2.
3.
4.
5.
$0
$ 12
$ 16
$ 48
Cannot be found
15. If quantity = 3, what is AFC?
1.
2.
3.
4.
$0
$6
$8
$ 12
15. If quantity = 3, what is AFC?
1.
2.
3.
4.
$0
$6
$8
$ 12
16. If quantity = 3, what is AVC?
1.
2.
3.
4.
$0
$6
$8
$ 12
16. If quantity = 3, what is AVC?
1.
2.
3.
4.
$0
$6
$8
$ 12
17. If quantity = 3, what is MC?
1.
2.
3.
4.
$0
$7
$ 48
$ 144
17. If quantity = 3, what is MC?
1.
2.
3.
4.
$0
$7
$ 48
$ 144
18. Q = 250,
what is
ATC?
1.
2.
3.
4.
5.
$0.15
$0.30
$0.47
$0.50
$0.65
18. Q = 250,
what is
ATC?
1.
2.
3.
4.
5.
$0.15
$0.30
$0.47
$0.50
$0.65
Q = 250,
what is
ATC?
1.
2.
3.
4.
5.
$0.15
$0.30
$0.47
$0.50
$0.65
19. Q = 250,
what is
AVC?
1.
2.
3.
4.
5.
$0.15
$0.30
$0.47
$0.50
$0.65
19. Q = 250,
what is
AVC?
1.
2.
3.
4.
5.
$0.15
$0.30
$0.47
$0.50
$0.65
Q = 250,
what is
AVC?
1.
2.
3.
4.
5.
$0.15
$0.30
$0.47
$0.50
$0.65
20. Q= 250,
what is
AFC?
1.
2.
3.
4.
$ 0.60
$ 0.50
$ 0.30
$ 0.20
20. Q= 250,
what is
AFC?
1.
2.
3.
4.
$ 0.60
$ 0.50
$ 0.30
$ 0.20
At Q = 250:
ATC - AVC = AFC
.50 - .30 = .20
21. Q = 250,
what is TC?
1.
2.
3.
4.
$ 125
$ 150
$ 200
$ 250
21. Q = 250,
what is TC?
1.
2.
3.
4.
$ 125
$ 150
$ 200
$ 250
At Q = 250:
ATC x Q = TC
$ 0.50 x 250 = $ 125
22. Q = 250,
what is TVC?
1.
2.
3.
4.
$30
$ 75
$ 150
$ 250
22. Q = 250,
what is TVC?
1.
2.
3.
4.
$30
$ 75
$ 150
$ 250
At Q = 250:
AVC x Q = TVC
$ 0.30 x 250 = $ 75
23. Q =250,
what is TFC?
1.
2.
3.
4.
5.
$ 30
$ 50
$ 75
$ 150
$ 250
23. Q =250,
what is TFC?
1.
2.
3.
4.
5.
$ 30
$ 50
$ 75
$ 150
$ 250
0%
$30
0%
0%
$50
$75
0%
$150
0%
$250
At Q = 250:
AFC x Q = TFC
.20 x 250 = $ 50
24. Q=250,
what is
MC?
1.
2.
3.
4.
5.
$ 0.30
$ 0.50
$ 0.65
$ 162.50
$ 250
24. Q=250,
what is
MC?
1.
2.
3.
4.
5.
$ 0.30
$ 0.50
$ 0.65
$ 162.50
$ 250
14. Q=250,
what is
MC?
1.
2.
3.
4.
5.
$ 0.30
$ 0.50
$ 0.65
$ 162.50
$ 250
25. If quantity =
Q, what is ATC?
1.
2.
3.
4.
0A
0B
0C
BC
25. If quantity =
Q, what is ATC?
1.
2.
3.
4.
0A
0B
0C
BC
At quantity = Q:
26. If quantity =
Q, what is AVC?
1.
2.
3.
4.
0A
0B
0C
BC
26. If quantity =
Q, what is AVC?
1.
2.
3.
4.
0A
0B
0C
BC
At quantity = Q:
27. If quantity =
Q, what is AFC?
1.
2.
3.
4.
AB
OB
OC
BC
27. If quantity =
Q, what is AFC?
1.
2.
3.
4.
AB
OB
OC
BC
At quantity = Q:
ATC – AVC = AFC
0C – 0B = BC
28. If quantity =
Q, what is TFC?
1.
2.
3.
4.
0CDQ
0BEQ
BCDE
0A
28. If quantity =
Q, what is TFC?
1.
2.
3.
4.
0CDQ
0BEQ
BCDE
0A
At quantity = Q:
TFC = AFC x Q
TFC = BCDE
29. If quantity =
Q, what is TVC?
1.
2.
3.
4.
0CDQ
0BEQ
0AFQ
BCDE
29. If quantity =
Q, what is TVC?
1.
2.
3.
4.
0CDQ
0BEQ
0AFQ
BCDE
At quantity = Q:
TVC = AVC x Q
TVC = 0BEQ
30. If quantity =
Q, what is TC?
1.
2.
3.
4.
0CDQ
OBEQ
BCDE
0AFQ
30. If quantity =
Q, what is TC?
1.
2.
3.
4.
0CDQ
OBEQ
BCDE
0AFQ
At quantity = Q:
TC = ATC x Q
TC = 0CDQ
31. If quantity =
Q, what is MC?
1.
2.
3.
4.
0CDQ
0BEQ
BCDE
0B
31. If quantity =
Q, what is MC?
1.
2.
3.
4.
0CDQ
0BEQ
BCDE
0B