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Graphing Costs definitions

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  • Marginal Cost
    Amount added to total cost when producing one more unit; its curve gets steep quickly and intersects average cost curves at their minimum points.
  • Average Fixed Cost
    Portion of total cost that remains constant and is spread over increasing output, resulting in a curve that always decreases.
  • Average Variable Cost
    Cost per unit that changes with output; its curve is U-shaped and lies below average total cost, narrowing the gap as output rises.
  • Average Total Cost
    Sum of average fixed and variable costs per unit; its curve is U-shaped and always above average variable cost.
  • Cost Curve
    Graphical representation showing how different types of costs change as output increases, including marginal, average, and fixed costs.
  • Output
    Quantity of goods produced, which influences the behavior and shape of cost curves on a graph.
  • Minimum Point
    Lowest value on a cost curve, where marginal cost intersects average variable and total cost curves.
  • Fixed Cost
    Expense that does not change with production level and becomes less significant per unit as output increases.
  • Variable Cost
    Expense that changes with the number of units produced, dominating total costs at high output levels.
  • U-Shaped Curve
    Graph pattern where costs decrease, reach a minimum, then increase, seen in marginal, average variable, and average total cost curves.
  • Graph
    Visual tool used to display relationships among cost curves and output, aiding in identifying cost behaviors.
  • Intersection
    Point where marginal cost crosses average variable and total cost curves, indicating their minimum values.
  • Gap
    Difference between average total cost and average variable cost curves, representing average fixed cost per unit.
  • Quantity
    Number of units produced, affecting the shape and spacing of cost curves on a graph.
  • Total Cost
    Combined expense of fixed and variable costs for all units produced, depicted by the average total cost curve.