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AFC: The abbreviation for average fixed cost, which is fixed cost per unit of output, found by dividing total fixed cost by the quantity of output. Average fixed cost is one of three related cost averages. The other two are average variable cost and avarage total cost. Average fixed cost decreases with larger quantities of output. Because fixed cost is FIXED and does not change with the quantity of output, a given cost is spread more thinly per unit as quantity increases. A thousand dollars of fixed cost averages out to $10 per unit if only 100 units are produced. But if 10,000 units are produced, then the average shrinks to a mere 10 cents per unit.
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Lesson 14: Production | Unit 4: Long-Run Production
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Page: 22 of 25
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In this unit, you should have learned about:- The long run as the planning period in which all inputs, especially capital, are variable.
- How the long-run production is guided by returns to scale rather than the law of diminishing marginal returns.
- The three types of returns to scale -- increasing, decreasing, and constant.
- Why increasing returns to scale result from resource specialization, support activities, and the relation between volume and area.
- Why decreasing returns to scale result from management control and fixed external inputs.
- How constant returns to scale is the balance between increasing returns to scale and decreasing returns to scale, which gives rise to the minimum efficient scale.
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L A broad monetary measure that combines M3 plus several liquid assets, including commercial paper, U.S. Treasury bills, savings bonds, and bankers' acceptances. L used to be tracked and reported by the Federal Reserve System along with M1, M2, and M3. However, L is no longer reported.
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BEIGE MUNDORTLE
[What's This?]
Today, you are likely to spend a great deal of time driving to a factory outlet seeking to buy either storage boxes for your computer software CDs or a set of tires. Be on the lookout for bottles of barbeque sauce that act TOO innocent.
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In the Middle Ages, pepper was used for bartering, and it was often more valuable and stable in value than gold.
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"Old age isn't so bad when you consider the alternative. " -- Cato, Roman orator
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ATC
Average Total Cost
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