Economics (AS)·Costs of production · NSSCAS 3.2a
Costs of production: FC, VC, AC & MC
Narrated lesson · press play
We now open the theory of the firm by looking at where a business's money goes when it produces. We separate fixed from variable costs, build a full cost table, and calculate total, average and marginal cost step by step. Then we draw the falling average fixed cost and the famous U-shaped average and marginal cost curves, and explain that U-shape with the law of diminishing returns in the short run and economies and diseconomies of scale in the long run. Keep a pen ready — this is a calculating lesson.
What you'll learn in this lesson
By the end you should be able to (NSSCAS Economics (AS) 3.2a):
- Calculate and illustrate total, fixed, variable, average and marginal costs
- Explain how average cost might be affected by economies and diseconomies of scale
Loading your lesson…
You're watching a free 3-minute preview — create a free account to keep going.