![]() ![]() And the fixed costsĪre in either of those, so they will cancel out. And your marginal costs are thinking about a difference in costsīetween two different states of output. They're just thinkingĪbout the variable costs. The reason why it doesn't affect your average variable cost is because your average variable cost are taking out out your fixed costs. So a change in your fixed costs, either upwards or downwards, would affect your average fixed cost and would affect your average total cost. Until you intersect with your marginal cost curve. And once again, just as before, it will trend downwards So the amount that yourĪverage fixed cost went up for any quantity, yourĪverage total cost would also go up that amount for that quantity. And then, which of these other curves also have fixed costs embedded in it? Well, your average totalĬost is a combination of your average variable cost and your average fixed cost. ![]() Well then your averageįixed cost would shift up, and it might look something like this. ![]() What would happen then? Pause this video and think about what would happen visually. So let's start with aĬhange in your fixed costs. But now let's think about how these curves might be impacted if you have changes in productivity or cost. Gets less and less over time, that they are going to, over time, converge to each other as your average fixed costs gets closer, and closer, and closer to zero. And so, since your average fixed cost are asymptoting downwards, you see that this difference between average total cost and average variable cost And then over time, thisĭifference that you see between your average total cost and your average variableĬost, that difference right over there, that is It goes from trending down to trending up. So it hits that minimum point, and the same thing happensĪt average total cost. That's where the average variable cost goes from trending down to trending up. And we talked about where it intersects the average variable cost. ![]() You see your marginal cost curve, and this is something that you'll typically see in a lot of textbooks. As you take that fixedĬost and you spread it over more, and more, and more units, you see that that justĪsymptotes toward zero as you get more and more units. So, we constructed these curves several videos ago to visualize In the last video, we numerically studied how changes in productivity or cost might affect your marginal cost, yourĪverage variable cost, your average fixed cost, ![]()
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