Economics class notes
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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?