Achievement of Maximum Profit Essay Example | Topics and Well Written Essays - 500 words

Achievement of Maximum Profit - Essay ExampleWhen companies utilize their equipment more extensively maintenance and repairs cost increase. Companies that increase their labor shifts incur in higher labor costs. Average total costs equal total costs shared out by quantity. The average total cost curvature is U-shaped. Subtracting average fixed costs is the formula for the average variable cost. The AVC crook lies vertically below the ATC curve by the amount of the AFC. The ATC and the AVC curve never touch because the AFC never falls to zero. The total variable cost is measured by the vertical distance amongst the horizontal TFC lines. The AVC curve bottoms out at a lower level for Q than does the ATC curve. The bare(a) costs measure the increase in total cost as output Q increases by one unit. Marginal cost is less than both average total cost and average variable cost. Due to the fact that marginal costs are less than both average total cost and average variable cost the ATC a nd AVC falls. The ATC and AVC falls because of the MC. The marginal cost curve cuts through with(predicate) the AVC curve at the bottom of the AVC curve. The MC curve cuts through the ATC curve at the bottom of the ATC curve. The ATC, AVC, and MC curves are all U-shaped. The vertical gap surrounded by AVC and ATC curves steadily diminishes as Q increases. These curves never touch. Businesses have options available with respect to how much output they want to be able to produce. Economies of scale help organizations reduce their costs. bigger scale operations have higher administrative expenses. Economies of scale help reduce administrative costs. When companies incur in diseconomies of scale their operating costs rise. The LRATC curve shows the lowest average total cost at which any given level of output can be produced. The LRATC curve is made up merely of points on the firms alternative ATC curves.