Economics/mar2-cost-production.md

March 2 - Cost of Production

Fixed vs Variable Cost

• Fixed Costs always have to be payed

  • Yearly salary

• Variable cost changes

  • Hourly paycheck rate

• Total Cost -- fixed plus variable cost

• Cost minimization -- the combination of spending that costs the least

• Marginal cost -- cost of doing something again

  • marginal costs total minus output

Profit Maximizing

• Output that gives as much profit as possible
• Marginal revenue -- additional revenue of another unit of output
• When should a company go out of Business?