The cost curves A common way to simplify the problem is to assume that only produces a good and only going to have an input which varies with the production of the company, while all other fixed (Note: In a model particular, assume that a set of variables may change as other variables will remain constant regardless of its relations with the rest of the model is what is called ceteris paribus, a technique simplistic but can be misleading when compared with reality, which ultimately everything is connected and influences all) That, for example, can study how a firm's output of goods will determine the demand for labor by the company. All inputs for which the company has already paid, and not likely to change in the short term, the total value of these would give us what is called the Fixed Cost .. By contrast, the value of inputs that will change as decided by the level of output, variable cost will be ..The sum of the two is the total cost. As production varies according to the company, these costs will vary, you get to study what are called micro-cost curve. The most important would be the variable cost, the total cost, the average cost, and the marginal cost. Variable cost curve relates the total variable costs to the level of production. It is generally growing, but may tend to grow more slowly. The Total Cost is virtually identical, it would be a shift in the variable on the magnitude of fixed cost, which is important especially in Theory of Industrial Production because high fixed costs discourage companies from entering the market. The average cost curve, however, can be up or down, even in some sections upward and downward in others, since this curve as we reported, on average, it costs us to produce each output depending on the level of production.For example, it is possible that some function of the value of production to produce 300 units of output is such that each 1.5 unit cost money, while producing 600 can cost us each only 1 currency unit. This would be possibly related to the existence of economies of scale, as noted above. The marginal cost curve, the analysis is very important, reason is sometimes referred to certain studies of economic marginality. This curve, which mathematically equivalent to the derivative of the total cost curve, we represent the more it costs us to produce one unit of output from the previous level of production. For example, to produce 100 units of goods have a monetary cost of 1,000 units, and produce 101 units of the same while the cost out of 1020 monetary units, the curve would be worth 20 (1020-1000) at the 100 level of production . The more general analysis to determine the level of output of a firm part of the company wants to maximize its profit.The benefit is equal to earnings (I) minus cost (C), both are functions dependent on the level of production. From a mathematical point of view, maximizing a function equal to zero implies that the derivative function with respect to the variable we want to maximize, if we derive the profit function would be the derivative of its components: revenue minus cost: dI / dx -- dC / dx 0 This leads to marginal revenue (which would lead the company's revenue in the profit function) should be equal to marginal cost, which is the derivative of the costs of the company, as a condition for a production level that maximizes profits. Assuming that market prices can not change the performance of the company, but are given (because we are what is called Perfect Competition, in which there are many companies and none can influence the price), then the condition is: Price must be equal to marginal cost.An example of this is: if the function of profit of the company is B (Y) PY-C (Y) (production price is income, which is subtracted from the total cost of this production), then if Applying the first order condition of maximum of a differentiable function (we assume that C is a differentiable function), we have the condition is P-C '(Y) 0, ie, C' represents the marginal cost of producing the quantity "Y" output. This has already said that is only valid for a perfectly competitive firm. See also: Isoquant See also: Law of diminishing returns See also: Supply Curve

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