Shifting Cost Curves Lump Sum and Pert Unit

  • Slides: 20
Download presentation
Shifting Cost Curves Lump Sum and Pert Unit Taxes 1

Shifting Cost Curves Lump Sum and Pert Unit Taxes 1

review • • • Explain the law of diminishing marginal returns Give a real

review • • • Explain the law of diminishing marginal returns Give a real life example of the law of DMR What are fixed costs? What are variable costs? What is the definition of the short run? What are costs like in the long run? Describe the equations for AVC, AFC, ATC Describe the 3 phases of diminishing marginal returns Why is the MC curve J shaped? Why is the ATC curve U shaped? What are the coefficients of inelastic and elastic demand?

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 FC 100 100 7 46 100 TC MC AVC AFC ATC 3

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 FC 100 100 TC 100 116 121 126 130 136 MC 10 6 5 3 4 6 7 46 100 146 10 AVC AFC ATC 10 100 110 8 50 58 7 33. 3 30. 3 6. 5 25 31. 5 6 20 26 6 16. 67 22. 67 Lump Sum: What if Fixed Costs increase to $200 6. 6 14. 3 20. 9 4

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 FC 100 100 TC 100 116 121 126 130 136 MC 10 6 5 5 4 6 7 46 100 146 10 AVC AFC ATC 10 100 110 8 50 58 7 33. 3 30. 3 6. 5 25 31. 5 6 20 26 6 16. 67 22. 67 6. 6 14. 3 20. 9 5

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 FC 200 200 TC 100 116 121 126 130 136 MC 10 6 5 5 4 6 7 46 200 146 10 AVC AFC ATC 10 100 110 8 50 58 7 33. 3 30. 3 6. 5 25 31. 5 6 20 26 6 16. 67 22. 67 6. 6 14. 3 20. 9 6

Shifting Costs Curves TP 0 1 2 3 4 5 6 7 VC 0

Shifting Costs Curves TP 0 1 2 3 4 5 6 7 VC 0 10 16 21 26 30 36 FC 200 200 TC 200 216 221 226 230 236 MC 10 6 5 5 4 6 AVC AFC ATC 10 100 110 8 50 58 7 33. 3 30. 3 6. 5 25 31. 5 6 20 26 6 16. 67 22. 67 46 200 246 10 6. 6 14. 3 Which Per Unit Cost Curves Change? 20. 9 7

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 7 46 FC 200 200 TC 200 216 221 226 230 236 MC 10 6 5 5 4 6 AVC AFC ATC 10 100 110 8 50 58 7 33. 3 30. 3 6. 5 25 31. 5 6 20 26 6 16. 67 22. 67 200 246 10 6. 6 14. 3 ONLY AFC and ATC Increase! 20. 9 8

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 7 46 FC 200 200 TC 200 216 221 226 230 236 MC 10 6 5 5 4 6 AVC AFC ATC 10 200 110 8 100 58 7 66. 6 30. 3 6. 5 50 31. 5 6 40 26 6 33. 3 22. 67 200 246 10 6. 6 28. 6 ONLY AFC and ATC Increase! 20. 9 9

Lump Sum Taxes If fixed costs change ONLY AFC and ATC Change! TP 0

Lump Sum Taxes If fixed costs change ONLY AFC and ATC Change! TP 0 1 2 3 4 5 6 7 VC 0 10 16 21 26 30 36 46 FC 200 200 TC 200 216 221 226 230 236 246 MC 10 6 5 5 4 6 10 AVC 10 8 7 6. 5 6 6 6. 6 MC and AVC DON’T change! AFC ATC 200 210 108 66. 6 73. 6 50 56. 5 40 46 33. 3 39. 3 28. 6 35. 2 10

Shift from an increase in a Fixed Cost MC Costs (dollars) ATC 1 ATC

Shift from an increase in a Fixed Cost MC Costs (dollars) ATC 1 ATC AVC AFC 1 AFC Quantity 11

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 7 46 FC TC MC AVC AFC 100 100 10 100 Per 110 Unit 10 Tax: 100 116 6 8 50 What if the cost for 100 121 5 7 33. 3 variable resources 100 126 5 6. 5 25 increase 100 130 4 6 20 100 136 6 6 16. 67 100 146 10 6. 6 14. 3 ATC 110 58 30. 3 31. 5 26 22. 67 20. 9 12

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 10 16 21 26 30 36 FC 100 100 TC 100 116 121 126 130 136 MC 10 6 5 5 4 6 7 46 100 146 10 AVC AFC ATC 10 100 110 8 50 58 7 33. 3 30. 3 6. 5 25 31. 5 6 20 26 6 16. 67 22. 67 6. 6 14. 3 20. 9 13

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 11

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 11 18 24 30 35 43 FC 100 100 TC 100 116 121 126 130 136 MC 10 6 5 5 4 6 7 55 100 146 10 AVC AFC ATC 10 100 110 8 50 58 7 33. 3 30. 3 6. 5 25 31. 5 6 20 26 6 16. 67 22. 67 6. 6 14. 3 20. 9 14

Shifting Costs Curves TP 0 1 2 3 4 5 6 7 VC 0

Shifting Costs Curves TP 0 1 2 3 4 5 6 7 VC 0 11 18 24 30 35 43 FC 100 100 TC 100 111 118 124 130 135 143 MC 11 7 6 6 5 8 AVC AFC 11 100 9 50 7 33. 3 8 25 7 20 7. 1 16. 67 ATC 111 59 41. 3 32. 5 27 23. 8 55 100 155 12 7. 8 14. 3 Which Per Unit Cost Curves Change? 22. 1 15

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 11

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 11 18 24 30 35 43 FC 100 100 TC 100 111 118 124 130 135 143 MC 11 7 6 6 5 8 7 55 100 155 12 AVC AFC 11 100 9 50 7 33. 3 8 25 7 20 7. 1 16. 67 7. 8 MC, AVC, and ATC Change! 14. 3 ATC 111 59 41. 3 32. 5 27 23. 8 22. 1 16

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 11

Shifting Costs Curves TP 0 1 2 3 4 5 6 VC 0 11 18 24 30 35 43 FC 100 100 TC 100 111 118 124 130 135 143 MC 11 7 6 6 5 8 7 55 100 155 12 AVC AFC 11 100 9 50 7 33. 3 8 25 7 20 7. 1 16. 67 7. 8 MC, AVC, and ATC Change! 14. 3 ATC 111 59 41. 3 32. 5 27 23. 8 22. 1 17

Per Unit Taxes If variable costs change MC, AVC, and ATC Change! TP 0

Per Unit Taxes If variable costs change MC, AVC, and ATC Change! TP 0 1 2 3 4 5 6 VC 0 11 18 24 30 35 43 FC 100 100 TC 100 111 118 124 130 135 143 MC 11 7 6 6 5 8 7 55 100 155 12 AVC AFC ATC 11 100 111 9 50 59 8 33. 3 41. 3 7. 5 25 32. 5 7 20 27 7. 16 16. 67 23. 83 7. 8 14. 3 22. 1 18

Shift from an increase in a Variable Costs MC 1 MC ATC 1 Costs

Shift from an increase in a Variable Costs MC 1 MC ATC 1 Costs (dollars) ATC AFC Quantity 19

20

20