# Short run cost

##### Intros
###### Lessons
1. Short Run Cost Overview:
2. Total Cost
• Cost of all factors of production
• Separated into two types of costs
• Total fixed cost
• Total variable cost $\,$$\,$ TVC
• TC = TFC + TVC
• How it graphically looks
3. Marginal Cost & Average Cost
• Marginal cost = $\large \frac{increase\; in\; total\; output}{increase\; in\; output}$
• Average fixed Cost: total fixed cost per unit of output
• Average Variable Cost: total variable cost per unit of output
• Average Total Cost: Total cost per unit of output
• ATC = AFC + AVC
• How it graphically looks
• Why are they U-Shaped?
4. Shifts in Cost Curve
• Technological change lowers cost $\,$$\,$ shift total cost downward
• TC $\, \downarrow \,$, TFC $\, \uparrow \,$, and TVC $\, \downarrow \,$
• Increase in Factor of Production prices $\,$$\,$ shift total cost upward
• Case 1: TC $\, \uparrow \,$, TFC $\, \uparrow \,$, AFC $\, \uparrow \,$, but TVC, AVC, MC unchanged
• Case 2: TC $\, \uparrow \,$, TVC $\, \uparrow \,$, AVC $\, \uparrow \,$, MC $\, \uparrow \,$ but TFC, AFC unchanged
##### Examples
###### Lessons
1. Graphing Total Cost, Total Fixed Cost, & Total Variable Cost
Consider the following information:
 Labor (workers) Output (chocolate bars) 1 20 2 50 3 100 4 120 5 130 6 135

Suppose it costs $100 to hire a worker, and the total fixed cost is$200. Graph the TC, TFC, and TVC curve.
1. Consider the following information:
 Labor (workers) Output (chocolate bars) 1 30 2 60 3 120 4 150 5 160 6 165

Suppose it costs $150 to hire a worker, and the total fixed cost is$200. Graph the TC, TFC, and TVC curve.
1. Calculating Average Total Cost, Fixed Cost, Variable Cost & MC
Consider the following information:
 Labor (workers) Output (chocolate bars) 1 20 2 50 3 100 4 120 5 130 6 135

Suppose it costs $100 to hire a worker, and the total fixed cost is$200. Calculate the ATC, AFC, TVC, and MC curve, and graph.
1. Understanding Shifts in Cost Curves
Suppose a firm rents a building, and the rent increases by \$300. How would it impact the TC, TVC, TFC, ATC, AVC, AFC, and MC curve?
1. Suppose a firm decreases the wage of workers. How would it impact the TC, TVC, TFC, ATC, AVC, AFC, and MC curve?