Flashcards in Short Run Costs 7.3-8 ~ Benjamin Rainwater Deck (12):
The short run is
a brief period of time during which only one input can be varied.
Fixed inputs are
inputs in the production process that do not change with changes in output. Examples are machinery and factories.
Variable inputs are
inputs that can be changed when output changes. Usually labor is the only variable input.
Total fixed costs (FC) are
short-run costs that that do not vary with output.
Average fixed costs (AFC) are
fixed costs divided by total output.
Average variable costs (AVC) are
variable costs divided by total output.
Average total costs (ATC) are
the summation of AFC and AVC.
fixed costs decrease as total product (TP)...
To graph average total costs (ATC), you
must get the vertical summation of
The ATC curve will always be lower/higher than the AVC curve?
The ATC curve is always lower/higher than the AFC curve?