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Average cost is the total cost of producing a given quantity of output divided by the quantity produced. Variable cost is the cost that varies with the level of output produced. It includes costs such as raw materials, labor, and utilities that are directly related to production.
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What is average over time?
Average over time refers to the calculation of the mean or average value of a given variable over a specific period. This involves adding up all the values of the variable during that period and dividing by the number of observations. It helps in understanding the trend or behavior of the variable over time.
What is the cost of extracting granite rocks?
The cost of quarrying granite is so variable, that it is impossible to give a precise figure.
Explain why the AVC and ATC move closer together as output expands?
As output expands, fixed costs are spread out over a larger quantity of output, causing average fixed cost (AFC) to decrease. Since average total cost (ATC) is the sum of average variable cost (AVC) and AFC, and AFC is decreasing, ATC will also decrease. However, AVC tends to decrease at a slower rate than AFC, so the gap between AVC and ATC narrows as output expands.
How can you find the variable cost per unit based on fixed cost-year and selling price per unit with volume unit-year?
To find the variable cost per unit, subtract the fixed costs from the total costs for the year and divide that by the total number of units produced/sold for the year. This will give you the variable cost per unit. Variable cost per unit = (Total costs - Fixed costs) / Volume unit-year.
What are the different type of cost?
The different types of costs:opportunity costaccounting cost or historical coststransaction costsunk costmarginal cost
What is the formula to find the average variable cost?
Average Variable Cost = Total Variable Cost/ Quantity Average Cost = Average Fixed Cost + Average Variable Cost Average Cost = Total Cost/Quantity
Why is average cost and average variable cost are both you shaped?
the average variable cost curve and average cost curve are u- shaped because of the law of variable proportions.
What is happening to average variable costs when they equal marginal costs?
When average variable costs equal to the average marginal cost, the average variable cost will be at the minimum point. i.e. lowest cost
What is cost What is the difference between total cost and average cost?
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
When the marginal cost is less than the average variable cost the average variable cost will?
decrease. Think about it this way, if you have a room full of people and you get their average height(average variable cost), and now each person that walks into the room(marginal cost) is shorter than the average, the average will drop.
What is the difference between average total costs and average variable costs?
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
Average variable cost function?
To find the Average Variable Cost functions you need the following: ATC, TFC and TC.
What is the relationship between Average variable cost Average fixed cost and marginal cost?
we can subtract the AVC and we will get the MC
What is the average operating cost for gulfstream 2?
Total Variable Cost $4,196
When the firm attains minimum average variable cost how many units of labor is it using?
When a firm attains minimum average variable cost, the number of units of labor it is using depends on the average product.
DO Average cost always falls as output increases because fixed costs will be spread more thinly?
Not necessarily. Total Cost = Fixed Cost + Variable Cost; Variable Cost=f(Quantity) and if f`(Quantity)>0 it implies that as quantity produced rises variable cost would rise. Average Total Cost=Average Fixed Cost + Average Variable Cost. If initially the Total Cost function is more of an odd function (mostly it is) then the Average Cost will look more like a parabola i.e. it will tend to fall becuase the Fixed Cost gets thin but later that is overtaken by the increase in Variable Cost. But there are cases when Average Total Cost does fall continuously as quantity increases and these involve huge Fixed Costs like say Electric Supply Infrastructure. This is called natural monopoly.
What effect will an increase in output have on average fixed average variable and average total cost?
average fixed will go down, average variable will remain the same, and average total will go down.
