Assignment
5/22/2013 Economic Assignment | Sajanpreet kaur Brar. |
atmc | micro economics |
ASSIGNMENT COVER SHEET (INDIVIDUAL) SUBJECT CODE: | BUECO 1507 | SUBJECT TITLE: | BUSINESS MICRO ECONOMICS | ASSIGNMENT NUMBER AND TITILE: | 1, COST CURVES, MONOPOLY, MICROECONOMICS REFORM.
BUECO1507 (ECONOMICS ASSIGNMENT)
Answer 1.) Cost Curves a.) The Marginal Cost (MC) - The increase in the cost that accompanies a unit increase in output; the partial derivative of the cost function with respect to output. Additional cost associated with producing one more unit of output.
Marginal cost curve - A curve that graphically represents the relation between the marginal cost incurred by a firm in the short-run product of a good or service and the quantity of output produced.
Diagram: Marginal cost curve.
* The MC curve is generally increasing. This is due to the decreasing marginal productivity of labour. (Referred from econ http://www.econmodel.com downloaded on 14th May 2013). b.) The Average Cost (AC) - The average cost is the total cost divided by the number of units produced.
Average cost curve – The graphical representation of average cost.
Diagram: Average cost curve.
The AC curve is U-shaped. This is because the ATC is made up of AVC, which is increasing, and AFC, which are decreasing. At low production quantities the decline in AFC dominates, but eventually the increasing AVC overwhelms the average costs.
c.)The Average Fixed Cost (AFC) - A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company, independent of any business activity. It is one of the two components of the total cost of a good or service, along with variable cost.
Average fixed cost curve - A curve that graphically represents the relation between average fixed cost
atmc | micro economics |
ASSIGNMENT COVER SHEET (INDIVIDUAL) SUBJECT CODE: | BUECO 1507 | SUBJECT TITLE: | BUSINESS MICRO ECONOMICS | ASSIGNMENT NUMBER AND TITILE: | 1, COST CURVES, MONOPOLY, MICROECONOMICS REFORM.
BUECO1507 (ECONOMICS ASSIGNMENT)
Answer 1.) Cost Curves a.) The Marginal Cost (MC) - The increase in the cost that accompanies a unit increase in output; the partial derivative of the cost function with respect to output. Additional cost associated with producing one more unit of output.
Marginal cost curve - A curve that graphically represents the relation between the marginal cost incurred by a firm in the short-run product of a good or service and the quantity of output produced.
Diagram: Marginal cost curve.
* The MC curve is generally increasing. This is due to the decreasing marginal productivity of labour. (Referred from econ http://www.econmodel.com downloaded on 14th May 2013). b.) The Average Cost (AC) - The average cost is the total cost divided by the number of units produced.
Average cost curve – The graphical representation of average cost.
Diagram: Average cost curve.
The AC curve is U-shaped. This is because the ATC is made up of AVC, which is increasing, and AFC, which are decreasing. At low production quantities the decline in AFC dominates, but eventually the increasing AVC overwhelms the average costs.
c.)The Average Fixed Cost (AFC) - A cost that does not change with an increase or decrease in the amount of goods or services produced. Fixed costs are expenses that have to be paid by a company, independent of any business activity. It is one of the two components of the total cost of a good or service, along with variable cost.
Average fixed cost curve - A curve that graphically represents the relation between average fixed cost
Bibliography: * Arleen J. Hoag, John H. Hoag(2006), Business and Economics, pg.122 (London: World Scientific Publishing Co. Ltd.) * S.A.Siddiqui (2006), Managerial Economics and Financial Analysis, pg * Roger A. Arnold,(2005,08) Economics, 8th ed. (USA: Thomson Learning, Inc. 2008. * Frank Machovec, (2003), Perfect Competition and Transformation of Economics, (New York: Taylor& Francis e-Library, 2003). * Albon, R. (1988) ‘The welfare costs of the Australian telecommunications pricing structure’, Economic Record, 64, 102–12. * Boyco, M., Shleifer, A * Commonwealth of Australia (1991) Industry Commission: Annual report 1990–91, AGPS, Canberra. * Commonwealth of Australia (1992) Industry Commission: Annual report 1991–92, AGPS, Canberra * Dixit, A (1997) ‘Power of incentives in private versus public organizations’, American Economic Review, 87, 378–82).