Report for Micro and Macro Theory and Application
Report for Micro and Macro Theory and Application
Introduction
This is a report with lots of theory which referenced to the case--Sonny’s “move”, you can find the cost theory, the oligopoly market and other market structure theory, profit theory with lots of information relatively, and the author had given analysis about these theory.
1.0 Cost theory
1.0.1 Total cost
1.0.1.1 Definition
The total cost is the sum of fixed and variable costs.
Fixed costs: fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. You can see the fixed costs curve at 1-1.
Variable costs: Variable costs are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal costs over all units produced. It can also be considered normal costs. You can see the variable costs curve at 1-1.
The total costs equal to fixed costs plus variable costs.(TC=TFC+TVC)
1.0.1.2 Chart Chart of Total Costs (1-1)
The total costs and total variable costs curve increased slowly in the first stage and increased fast in the second stage because that the more production the Sonny supplied, the more labor and the equipment will be needed, and the costs will increase faster. And because the fixed costs were consists of the fixed expenses, so the curve kept as a line.
1.0.2 Average cost
1.0.2.1 Definition
In economics, average cost or unit cost is equal to total cost divided by the number of goods produced. It is also equal to the sum of average variable costs plus average fixed costs.(ATC=AFC+AVC)
You can find the curve at 1-2.
1.0.2.2 Chart Chart of average cost (1-2)
The diagram showed U-shaped, because of the diminishing marginal product--It is the property whereby the marginal product of an input declines as the quantity of the input increases.
1.0.3 Marginal cost
1.0.3.1 Definition
In economics and finance,
Introduction
This is a report with lots of theory which referenced to the case--Sonny’s “move”, you can find the cost theory, the oligopoly market and other market structure theory, profit theory with lots of information relatively, and the author had given analysis about these theory.
1.0 Cost theory
1.0.1 Total cost
1.0.1.1 Definition
The total cost is the sum of fixed and variable costs.
Fixed costs: fixed costs are business expenses that are not dependent on the level of goods or services produced by the business. You can see the fixed costs curve at 1-1.
Variable costs: Variable costs are expenses that change in proportion to the activity of a business. Variable cost is the sum of marginal costs over all units produced. It can also be considered normal costs. You can see the variable costs curve at 1-1.
The total costs equal to fixed costs plus variable costs.(TC=TFC+TVC)
1.0.1.2 Chart Chart of Total Costs (1-1)
The total costs and total variable costs curve increased slowly in the first stage and increased fast in the second stage because that the more production the Sonny supplied, the more labor and the equipment will be needed, and the costs will increase faster. And because the fixed costs were consists of the fixed expenses, so the curve kept as a line.
1.0.2 Average cost
1.0.2.1 Definition
In economics, average cost or unit cost is equal to total cost divided by the number of goods produced. It is also equal to the sum of average variable costs plus average fixed costs.(ATC=AFC+AVC)
You can find the curve at 1-2.
1.0.2.2 Chart Chart of average cost (1-2)
The diagram showed U-shaped, because of the diminishing marginal product--It is the property whereby the marginal product of an input declines as the quantity of the input increases.
1.0.3 Marginal cost
1.0.3.1 Definition
In economics and finance,