Week 2: Costs of the supplier

• newEditor
• Economie
• Middelbare school
• vwo
• Leerjaar 4

Week 2: Costs of the supplier

The costs of the supplier

1. You can explain the difference between fixed and variable costs
   

2. You can identify the difference between progressive, proportional, and regressive variable costs.
   

3. You can explain the trend of total, average, and marginal costs both graphically and algebraically.
   

4. You can explain the trend of total, average, and marginal revenues both graphically and algebraically.

1. You can explain the difference between fixed and variable costs.

Variable costs

Fixed costs

Total costs

Costs that change if the production volume changes

Costs that aren't affected if the production volume changes (stays the same)

The costs of the supplier

1. You can explain the difference between fixed and variable costs
   

2. You can identify the difference between progressive, proportional, and regressive variable costs.
   

3. You can explain the trend of total, average, and marginal costs both graphically and algebraically.
   

4. You can explain the trend of total, average, and marginal revenues both graphically and algebraically.

2. You can identify the difference between progressive, proportional, and regressive variable costs.
   

Degressive Proportional Progressive

The costs of the supplier

1. You can explain the difference between fixed and variable costs
   

2. You can identify the difference between progressive, proportional, and regressive variable costs.
   

3. You can explain the trend of total, average, and marginal costs both graphically and algebraically.
   

4. You can explain the trend of total, average, and marginal revenues both graphically and algebraically.

3. You can explain the trend of total, average, and marginal costs both graphically and algebraically.
   

• ATC= TC/q

• AVC= TVC/q

• AFC= TFC/q

• ATC= AVC+AFC

Given

TC= 0,15q+30000

3. You can explain the trend of total, average, and marginal costs both graphically and algebraically.
   

Analysis:

- Why is the AVC (in this case) a horizontal line?

- Why does the AFC line slope downwards?

- Why does the ATC line slope downwards?

3. You can explain the trend of total, average, and marginal costs both graphically and algebraically.
   

Average costs

Q

Costs

Marginal costs

• The change in total costs when one additional product is made.

• MC = Differentiate TC

Example:

TC = 0.15q + 30000

MC = 0.15

The costs of the supplier

1. You can explain the difference between fixed and variable costs
   

2. You can identify the difference between progressive, proportional, and regressive variable costs.
   

3. You can explain the trend of total, average, and marginal costs both graphically and algebraically.
   

4. You can explain the trend of total, average, and marginal revenues both graphically and algebraically.

4. You can explain the trend of total, average, and marginal revenues both graphically and algebraically.

• Total Revenue (TR) = Selling price (p) * Quantity sold (q)

• For example, if the selling price is €0.30 then TR = 0.30q

• AR (average revenue) = TR/q

• Thus AR = 0.30

• MR (marginal revenue) = The change in total revenue when one additional product is sold.

• MR = Differentiate TR
  MR = .......

4. You can explain the trend of total, average, and marginal revenues both graphically and algebraically.