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Your fixed cost is going to be lower than you average cost and marginal cost as it is what you have to pay no matter what. If your business has a fixed cost of $800 (renting the building, insurance, and other things that don't change month to month) per month you and utilities, pay roll, and inventory to that (all things that change month to month) and average the amount out over, lets just say, a year this will allow you to subtract the average cost from the fixed cost to get the average marginal cost. You can deduce that the marginal cost month by month is the total minus the fixed. Draw your own graph. Another way of putting it.. Average Cost curve has a U shape and the Marginal Cost curve intersects the Average Cost curve at its minimum. Average Cost has U shape because when a firm starts producing initially, it experiences increasing returns - as the Fixed Costs are being spread over more levels of output and the combination of input factors reach optimum. This is where AC curve is falling. Then once the Short-run capacity constraints of the Fixed Inputs is reached, the firm begins to experience diminishing marginal returns to its variable inputs. In other words, the principle of diminishing returns is becoming more dominant. This is where AC curve is increasing. When MC is below AC, AC is falling because producing an extra output will pull down average costs. When MC is above AC, AC is rising, because producing an extra output will increase AC. Therefore MC always intercepts a U shaped AC curve at its minimum point.
What else can I help you with?
Compare between the short run and long run costs using all categories of coststotal costtotal average costfixed costvariable costaverage fixed costaverage variable cost?
In the short run, all costs are considered variable except for fixed costs, which remain constant. Total cost in the short run can fluctuate due to changes in variable costs, affecting average total cost. In the long run, all costs become variable, allowing for more flexibility in adjusting production levels to optimize efficiency and minimize costs. Fixed costs become average fixed cost and average variable cost in the long run as they spread over more units of production.
Using krasnoselskii fixed point theorem prove fixed point of a operator in a banach space?
Krasnoselskii fixed point theorem states that under certain sircumstances the operator has at least one fixed point in a subset of a Banach space. It doesn't say anything about uniqueness of solutions, just existence, but sometimes this is usefull enough, and perhaps you can get uniqueness by some other way. I hope this answers your question
Is interest a fixed cost?
No, interest is considered a variable cost because it can change based on the amount borrowed, the interest rate, and the length of time the funds are borrowed for. Fixed costs, on the other hand, remain constant regardless of the level of production or sales.
Define high low method?
The high-low method is a technique used to separate fixed and variable costs within a mixed cost. By comparing the highest and lowest activity levels and the corresponding total costs, this method allows you to estimate the fixed and variable components of a cost.
What is a bounded array?
Always arrays are bounded almost in all programming languages.As we all know array will be having bounded that is fixed no. of values in it.In java you can consider ArrayList a unbounded array.Since that is implementing a list array can keep on growing and will not be bounded in size.But you can not this kind of feature in the languages like c.you must define an array which is of fixed length.
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
Relationship between marginal cost and average total cost?
The cost curves best tells us the relationship between the marginal cost and average total cost. The average fixed cost (AFC) curve will decline as additional units are produced, and continue to decline.
Marginal product curve?
A marginal product curve is a visual presentation that demonstrates the relationship between the marginal product and the quantity of its input. All other inputs are fixed.
What is the relationship between marginal productivity and marginal cost?
The marginal product curve is 'n' shaped because of the law of diminishing returns. As you add more units of a variable factor, at first, the marginal product rises, (this is because the fixed factor is under-utilised, so adding more units of the variable factor will increase the output from each additional unit). But after a certain point, the marginal product begins to fall, as the fixed factor input becomes diluted amongst workers and so you get less from each additional unit of the variable factor. For an example, re-read the above paragraph and replace the word variable factor with labour and fixed factor with capital. The marginal cost curve is the inverse of the marginal product curve - hence it is shaped like a 'u' or a 'Nike tick'. This is because if your marginal product is high - then your marginal costs are low. For example, if a firm must pay electricity for the time it takes to produce a unit, if the firm can produce the unit quicker (i.e. has a high marginal product) then the cost of electricity will be lower. Hence the inverse relationship between marginal cost and marginal product.
Why average cost increase when marginal cost is increasing?
Marginal cost = derivative of (Total cost/Quantity) Where Total cost = fixed cost + variable cost Marginal cost = derivative (Variable cost/Quantity) (by definition, fixed costs do not vary with quantity produced) Average cost = Total cost/Quantity The rate of change of average cost is equivalent to its derivative. Thus, AC' = derivative(Total cost/Quantity) => derivative (Variable cost/Quantity) = MC. So, when MC is increasing, AC' is increasing. That is, when marginal cost increases, the rate of change of average cost must increase, so average cost is always increasing when marginal cost is increasing.
What is the relationship between the marginal rate of substitution and the concept of perfect substitutes in economics?
The marginal rate of substitution measures how much of one good a person is willing to give up to get more of another good while maintaining the same level of satisfaction. In the case of perfect substitutes, the marginal rate of substitution is constant because the goods can be easily exchanged for each other at a fixed rate.
If fixed cost do not change then the marginal cost?
Contrast to what we would normally think, changes in fixed costs do not affect marginal cost. For example, if a product costs $10 to produce, and the fixed cost goes up to $25, then marginal cost stays the same.
Relationship between fixed cost and variable cost?
There is a huge relationship between fixed cost and variable cost. These two costs are the opposite of each other.
Difference between absorption and marginal costing?
marginal costing is recommended by IAS and absorption costing is not recommended by IAS,marginal costing is used for internal purposes and absorption costing is ysed for external purposes,in marginal costing the fixed production overheads are not calculated as a product cost and in absorption costing the fixed prodution overheads are calculated as product cost.
What is the relationship between total fixed cost and output?
What is the relation ship between total fixed cost and output?
Profits will be maximized when marginal revenue?
Profits will be maximized when marginal revenue is equal to marginal costs. This will only happen in cases where there are fixed costs.
Do fixed and variable costs affect short-run marginal cost?
Fixed costs do not affect short-run marginal cost because they are just that- fixed. They are not dependent on quantity when it changes and does not vary directly with the level of output. Variable costs, however, do affect short-run marginal costs.
