ECON 200 – Explain the difference between the short-run

ECON 200 – Explain the difference between the short-run

Subject: Economics    / General Economics
Question
1. Explain the difference between the short-run and the long-run as it applies to production.
2. Consider Aunt Betty’s donut shop. Her store has fixed costs of $60 per day.
3. Complete the attached table. The variable costs are provided for you. Output Variable Total Marginal Average Average Fixed Cost Cost Cost Cost Fixed Cost Variable Costs (FC) (VC) (TC) (MC) (AFC) (AVC) 1_______ 10_______ _______ _______ _______ _______ 2_______ 18_______ _______ _______ _______ _______ 3_______ 30_______ _______ _______ _______ _______ 4_______ 45_______ _______ _______ _______ _______ 5_______ 65_______ _______ _______ _______ _______ Formulas for TC, MC, AFC and AVC
TC = FC + VC
MC=?TC/?Q
AFC = FC/Q
AVC=VC/Q Note: Marginal cost (MC) is the amount by which total cost rises with an
additional unit of output.
It is the ratio of the change in total cost to the change in the quantity of output.