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Graphing Costs definitions

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  • Marginal Cost
    The additional expense incurred from producing one more unit, depicted by a curve that intersects average cost curves at their lowest points.
  • Average Fixed Cost
    A per-unit expense that continuously decreases as output rises, reflecting fixed expenses spread over more units.
  • Average Variable Cost
    A per-unit expense that first falls then rises with output, forming a U-shaped curve, and never exceeds average total cost.
  • Average Total Cost
    A per-unit expense combining fixed and variable components, always above average variable cost, and U-shaped on a graph.
  • Cost Curve
    A graphical representation showing how different per-unit expenses change as output varies, crucial for analyzing production efficiency.
  • U-Shape
    A graphical pattern where values decrease to a minimum and then increase, characteristic of several cost curves in production analysis.
  • Minimum Point
    The lowest value on a curve, where marginal cost intersects average total and average variable cost curves.
  • Output
    The quantity of goods produced, which influences the behavior and relationships among various cost curves.
  • Fixed Cost
    An expense that remains unchanged regardless of production volume, causing average fixed cost to decline as output grows.
  • Variable Cost
    An expense that changes with production volume, forming the basis for average variable cost calculations.
  • Gap
    The vertical distance between average total cost and average variable cost curves, equal to average fixed cost at any output level.
  • Production Efficiency
    A condition reflected by cost curves, indicating optimal resource use when costs are minimized at certain output levels.
  • Intersection
    The point where two curves meet, notably where marginal cost crosses average total and average variable cost at their minimums.
  • Slope
    The rate at which a curve rises or falls, indicating whether average costs are increasing or decreasing with output.