Economics Exam > Economics Videos > Microeconomics- Interaction between individual buyer-seller > Understanding:Cost Curves - Economics
Understanding:Cost Curves - Economics Video Lecture | Microeconomics- Interaction between individual buyer-seller
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41 videos|12 docs|7 tests
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FAQs on Understanding:Cost Curves - Economics Video Lecture - Microeconomics- Interaction between individual buyer-seller
| 1. What are cost curves in economics? |  |
Ans. Cost curves in economics are graphical representations that show the relationship between the quantity of output produced and the costs incurred by a firm. These curves help in understanding how costs change as production levels vary.
| 2. What are the different types of cost curves in economics? | |
Ans. There are three main types of cost curves in economics:
- The average total cost (ATC) curve represents the average cost per unit of output.
- The average variable cost (AVC) curve shows the average variable cost per unit of output.
- The marginal cost (MC) curve illustrates the additional cost incurred by producing one more unit of output.
| 3. How are cost curves derived? | |
Ans. Cost curves are derived from the firm's production function and cost data. The production function describes the relationship between inputs and outputs, while cost data includes information on fixed costs, variable costs, and total costs. By plotting these data points, cost curves can be generated.
| 4. What is the relationship between marginal cost and average total cost? | |
Ans. The marginal cost (MC) curve intersects the average total cost (ATC) curve at its lowest point. This is because when marginal cost is below average total cost, producing an additional unit of output will decrease the average cost. Conversely, when marginal cost is above average total cost, producing an additional unit of output will increase the average cost.
| 5. How do cost curves help firms make production decisions? | |
Ans. Cost curves provide firms with valuable information to make production decisions. For example, the marginal cost curve helps firms determine the optimal level of output by comparing the additional costs of production with the additional revenue generated. Firms can also analyze the average total cost curve to assess their cost efficiency and competitiveness in the market. By understanding the cost curves, firms can make informed decisions on pricing, production levels, and resource allocation.
Text Transcript from Video
HEY! How are you doing econstudents!
This is Mr. Clifford
Welcome to AC-DC-ECON
In the previous video, I defined the types of costs:
Fixed cost, variable cost, total cost, and marginal cost.
You used the chart calculate each one of these and you also calculated the average cost curves:
average variable cost, average fixed cost, and average total cost.
If you haven't seen that video, make sure to go back because you gonna need that for gonna do right now.
Because right now, we gonna find out what these cost curves look like on the graph.
This is Mr. Clifford
Welcome to AC-DC-ECON
In the previous video, I defined the types of costs:
Fixed cost, variable cost, total cost, and marginal cost.
You used the chart calculate each one of these and you also calculated the average cost curves:
average variable cost, average fixed cost, and average total cost.
If you haven't seen that video, make sure to go back because you gonna need that for gonna do right now.
Because right now, we gonna find out what these cost curves look like on the graph.
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Dec 22, 2024 Last updated |
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