Mini lessons / Microeconomics / 3.2
3.2 Short-run costs, part 1: building the cost table
Given just output and total cost, can you find fixed cost, variable cost, marginal cost and every average? Fill in the table one column at a time.
Step 1 of 7
Two kinds of cost
Glow Candles rents a small workshop. Some of its costs stay the same however many boxes of candles it makes; others go up with every box.
- Fixed cost (FC) stays the same at every output: rent, insurance, the machine's lease. You pay it even if you make nothing.
- Variable cost (VC) changes with output: wax, wicks, boxes, hourly wages. Make nothing and VC is $0.
- Total cost (TC) is both together: TC = FC + VC.
Exam trapFixed means fixed in the short run. In the long run every cost can change, so nothing is fixed (that's 3.3).