ECON 202 1st Edition Lecture 15 Current Lecture Fixed Costs 108 Quantity Fixed Costs 216 Variable Costs Total Costs ATC VC TC ATC 1 12 120 120 6 222 222 2 48 156 78 24 240 120 3 108 216 72 54 270 90 4 192 300 75 96 312 78 5 300 408 81 6 150 366 72 8 6 432 540 90 216 432 73 20 7 588 696 99 43 294 510 72 86 8 768 876 109 30 384 600 75 9 972 1080 120 486 702 78 10 1200 1308 130 8 600 816 81 6 These notes represent a detailed interpretation of the professor s lecture GradeBuddy is best used as a supplement to your own notes not as a substitute There is a whole range of levels in fixed costs so there are many differences In the long run Downward sloping long run average cost curve is the economies of scale They have high fixed costs and cheaper variable costs Costs cant go below zero The curve will become fairly flat The point where the long run curve is flat is referred to as constant returns Eventually the long run average total cost curve will begin to curve upwards The Cost Curves you NEED to be familiar with Average Total Cost Curve U shape The difference is the average fixed cost Average Variable Cost U shape Marginal Cost Curve Small J shape Market Structures 1 2 3 4 Wal Mart La Creperie Starbucks Exxon Mobile Very different firms there is not one market structure for all of these firms For all firms there are many buyers o Buyers cant influence price Perfect Competition P C 1 Many Sellers 2 No small barriers to entry exit its not to difficult to set up barriers to entry 3 Standardized product a All sell the exact same thing b The customer is always right Example Farmers are close to perfectly competitive Stock Market Monopoly 1 One Seller or One Firm 2 Barriers to entry not easy for the average person to enter the industry a Control of resources Diamonds Oil Power Companies b Increasing returns to scale i Very high fixed costs ii Low to non existent variable costs c Technical Superiority firms were better than their competition Microsoft in the 90s d Government i Patents ii Copyrights 3 No close substitutes Example Comcast Oil
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