Production Cost in the Short-Run:The function TC = TC(w, r, Q) simplifies to TC = TC(Q)TC = TFC + TVC = Q⋅ AC = Q(AFC + AVC)
AC= TC/Q = TFC/Q + TVC/Q = AFC + AVC
MC = ΔTC/ΔQ = ΔTFC/ΔQ + ΔTVC/ ΔQ = MFC + MVC = MVC
Marginal Cost in SR is Marginal Variable Cost (as MFC = 0)
TC(Q) = F +VC(Q) . The necessary condition of minimum AVC (at point C) is:
Likewise, can you prove the condition at point D?
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