1. Cost Curves Average Costs Marginal Costs Long run and Short Run

2. Cost Function In our example, the short-run cost function was: Variable costs Fixed costs

3. Cost Curve

4. Average Cost Function The short run average cost function: Average variable cost Average fixed cost

5. Average Fixed Cost Curve

6. Average Variable Cost Curve

7. Why is AVC Increasing in y? Production function and AVC: Productions function features decreasing returns to scale wrt

8. Average Cost Curve

9. Marginal Cost Function The short run cost function: The short run marginal cost function:

10. Marginal and Average Variable Cost Curves

11. Marginal and Average Cost Curves

12. Variable Costs and the Marginal Cost Curve

13. Long Run In the long run there are no fixed factors of production Firm can freely adjust inputs Production costs are lower in the long run

14. Long and Short Run Cost Curves

15. Long and Short Run Average Cost Curves

16. Long and Short Run Marginal Cost Curves

17. Long and Short Run Cost Functions