微观经济学Ch21.ppt

Chapter 21 Cost Curves What do we do in this chapter? We examine how c(y) varies with y. Why? We need to prepare ourselves for studying firms’ supply. We have the following types of cost curves: A total cost curve and average total cost curve A variable cost curve and average variable cost curve An average fixed cost curve Marginal cost curve Comparing consumer behavior with producer behavior Consumer: Maximize Utility subject to linear constraint; Producer: Minimize linear function subject to production function; Minimizing a linear function makes things much simpler; Also, the production function is cardinal; utility is ordinal ! From last Chapter: Short-Run Long-Run Total Costs Fixed, Variable Total Cost Functions Let F be the short-run fixed cost F does not vary with the firm’s output level. Let cv(y) be the variable cost function. Then the total cost function is Av. Fixed, Av. Variable Av. Total Cost Curves For y 0, the firm’s average total cost function is Av. Fixed, Av. Variable Av. Total Cost Curves How about the average variable cost? It must be increasing eventually,since at least one input is fixed in the short-run. Marginal Cost Function Since the firm’s total cost function is: The marginal cost is: Marginal and Variable Cost Functions Note: Marginal and Variable Cost Functions How is marginal cost related to average variable cost? MC and ATC are similarly related Short-Run Long-Run Total Cost Curves Suppose the firm can be in one of just three short-runs; x2 = x2￠ or x2 = x2￠￠ x2￠ x2￠￠ x2￠￠￠.or x2 = x2￠￠￠. Short-Run Long-Run Total Cost Curves Short-Run Long-Run Total Cost Curves The firm has three short-run total cost curves. In the long-run, how does the firm choose amongst these three? Short-Run Long-Run Total Cost Curves The long-run total cost curve is the lower envelope of the short-run total cost curves. Short-Run Long-Run Average Total Cost Curves The same is true with average cost curves: