Understanding Fixed, Variable and Marginal Costs in Economics
Learn more about fixed, variable and marginal costs, average cost, long term supply curve, and economic profit.
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This course begins by discussing the fixed, variable, and marginal costs. You will learn that Fixed Cost is the cost that remains constant when the firm is in a short-run period. You will also learn that Total Cost is the overall cost incurred by a firm and Marginal Cost is the change in total cost divided by change in output or quantity. You will also look into Average Cost which is the per-unit cost and is calculated as total cost divided by output or quantity.
You will then look more closely into Marginal Cost which is a firm's additional cost and is calculated as a change in total cost divided by change in output or quantity. You will learn that if the marginal is less than the average, then the average declines, if the marginal is greater than the average, then the average rises, and if the marginal is equal to the average, then the average does not change. This course will also discuss the long term supply curve and economic profit.
Fixed, variable, and marginal costs are very important concepts to understand in economics. Upon the completion of this course, you will gain a better understanding of the concepts of Fixed cost, Variable cost, Marginal cost. You will also be able to visualize average cost and marginal cost as a slope as well as understand the difference between marginal revenue and marginal cost, and long term supply curve and economic profit. Sign up now and learn how to determine these key costs in economics.
Module 1: Understanding Fixed, Variable and Marginal Costs in Economics
Introducing Fixed, Variable, and Marginal Costs
Visualizing Average Costs and Marginal Costs as Slope
Marginal Cost and Average Total Cost
Marginal Revenue and Marginal Cost
Marginal Revenue Below Average Total Cost
Long Term Supply Curve and Economic Profit
Module 2: Fixed, Variable and Marginal Costs Assessment
Learning outcomes: - Explain the concepts: Fixed costs, Variable costs, Marginal costs; - Visualize average costs and marginal costs as a slope; - Compare marginal revenue and marginal costs; - Explain long term supply curve and economic profit.
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Fixed costs are the costs of business operations which remain constant in the short term, regardless of firm’s productivity, like rent. Variable costs vary with output levels, an example of a variable cost might be the materials required to construct a product, or the electricity bill incurred by the operation of machinery. Marginal cost is the additional costs incurred by a change in total production cost, which is calculated as the total change in cost divided by change in output.
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