Alexandrea's Econ Production Possibilities Frontier (PPF) & Specialization notes
Production possibilites Frontier PPF Curve
Shows the maximum combinations of two goods a society can produce.
Points ON the curve:
Attainable and Productively Efficient.
Points INSIDE the curve:
Attainable but Inefficient.
Points OUTSIDE the curve:
Unattainable.
Average Fixed Cost
Average Fixed Cost = Total Fixed Cost ÷ Quantity
Average Variable Cost
Average Variable Cost = Total Variable Cost ÷ Quantity
Average Total Cost
Average Total Cost = Total Cost ÷ Quantity
The vertical distance between the ATC line and the AVC line
is actually your AFC
AFC
Average Fixed Cost
AVC
Average Variable Cost
ATC
Average Total Cost
ATC
ATC = AFC + AVC.
total revenue
total revenue = price x quantity
profit
profit = total revenue - total cost
total cost
total cost = fixed cost + variable cost
Marginal Cost
Marginal Cost =total cost /quantity
Marginal product
-Increase in output that arises from an additional unit of input
-Other inputs constant
-Slope of the production function
Total cost
Total cost of producing a given amount of
Fixed costs
-Do not vary with the quantity of output produced
- Incur even if production is zero
Variable costs
-Vary with the quantity of output produced
when Marginal Cost < Average Total cost
Average Total Cost is falling
when Marginal Cost > Average Total Cost
Average Total Cost is rising
The marginal Curve crosses the Average Total Cost curve at the
Average Total Cost Curve's minimum