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OUTPUT: A generic term for a tangible good or an intangible service that is the end result of the production/resource transformation process. This notion of output, which also goes by the alias product, usually surfaces in the context of analyzing the short-run production of a firm. The short-run relation between a variable input and output is of particular interest because it reveals the law of diminishing marginal returns. This law indicates that additional quantities of a variable input, when added to a fixed input, have decreasing marginal products, or marginal returns.
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                           TOTAL COST CURVE: A curve that graphically represents the relation between the total cost incurred by a firm in the short-run production of a good or service and the quantity produced. The total cost curve is a cornerstone upon which the analysis of short-run production is built. It combines all opportunity cost of production into a single curve, which can then be used with the total revenue curve to determine profit. The marginal cost curve, THE focal point for the analysis of short-run production, is derived directly from the total cost curve. The shape of the curve reflects increasing marginal returns at small quantities of output and decreasing marginal returns at larger quantities. The total cost curve graphically represents the relation between total cost and the quantity of production. This curve can be derived in two ways. One is to plot a schedule of numbers relating output quantity and total cost. The other is to vertically add the total variable cost curve and the total fixed cost curve. The slope of the total cost curve is marginal cost. When constructing this curve, it is assumed that total cost changes as a result of changes in the quantity of output produced, while other variables like technology and resource prices are held fixed.| Total Cost Curve |  |
The graph at the right is the total cost curve for the short-run production of Wacky Willy Stuffed Amigos (those cute and cuddly lizards, snakes, armadillos and tarantulas). The quantity of Stuffed Amigos production, measured on the horizontal axis, ranges from 0 to 10 and the total cost incurred in the production of Stuffed Amigos, measured on the vertical axis, ranges from $3 to $46.The most striking feature of the total cost curve is its curvature. The total cost curve emerges from the vertical axis at $3, then twists and turns its way to $46. This curve begins relatively steep, then flattens, before turning increasingly steep once again. It is somewhat reminiscent of the total product curve. The reason is that both curves are guided by the law of diminishing marginal returns. A scenic trip along this curve reveals that the slope of the total cost curve flattens as the first four Stuffed Amigos are produced. This range of output corresponds with increasing marginal returns found in Stage I of production. Increasing marginal returns is what causes the total cost curve to flatten. Continuing this trip shows that the slope of the total cost curve becomes increasingly steeper after the fourth Stuffed Amigo is produced. Steeper and steeper. This range of output corresponds with decreasing marginal returns, and the extremely important law of diminishing marginal returns, found in Stage II of production. Deceasing marginal returns is what causes the total cost curve to become steeper and steeper and steeper. The total cost curve is frequently used with a total revenue curve to determine the profit maximizing level of production for a firm. However, this curve is perhaps most important as the basis for deriving the average total cost curve and the marginal cost curve. In particular, marginal cost is the slope of the total cost curve.
Recommended Citation:TOTAL COST CURVE, AmosWEB Encyclonomic WEB*pedia, http://www.AmosWEB.com, AmosWEB LLC, 2000-2023. [Accessed: March 20, 2023].
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Today, you are likely to spend a great deal of time browsing through a long list of dot com websites trying to buy either an AC adapter that won't fry your computer or a case for your designer sunglasses. Be on the lookout for slow moving vehicles with darkened windows.
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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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"Look at the abundance all around you as you go about your daily business. You have as much right to this abundance as any other living creature. It's yours for the asking." -- Earl Nightingale
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Declining Balance Depreciation
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