In economics, a cost function represents the minimum cost of producing a quantity of some good. The long-run cost curve is a cost function that models this minimum cost over time, meaning inputs are not fixed. Using the long-run cost curve, firms can scale their means of production to reduce the costs of producing the good. There are three principal cost functions (or 'curves') used in microeconomic analysis: * (LRTC) is the cost function that represents the total cost of production for all goods produced. * Long-run average cost (LRAC) is the cost function that represents the average cost per unit of producing some good. * Long-run marginal cost (LRMC) is the cost function that represents the cost of producing one more unit of some good. The idealized "long run" for a firm refers to the absence of time-based restrictions on what inputs (such as factors of production) a firm can employ in its . For example, a firm cannot build an additional factory in the short run, but this restriction does not apply in the long run. Because forecasting introduces complexity, firms typically assume that the long-run costs are based on the technology, information, and prices that the firm faces currently. The long-run cost curve does not try to anticipate changes in the firm, the technology, or the industry. It only reflects how costs would be different if there were no constraints on changing the inputs in the current period. An ideal cost curve assumes technical efficiency because a firm always has an incentive to be as technically efficient as possible. Firms have a variety of methods of using various amounts of inputs, and they select the lowest total cost method for any given amount of output (quantity produced). For example, if a micro-enterprise wanted to make a few pins, the cheapest way to do so might be to hire a jack-of-all-trades, buy a little scrap metal, and have him work on it at home. However, if a firm wanted to produce thousands of pins, the lowest total cost might be achieved by renting a factory, buying specialized equipment, and hiring an assembly line of factory workers to perform specialized actions at each stage of producing the pins. In the short run, the firm might not have time to rent a factory, buy specialized tools, and hire factory workers. In that case, the firm would not be able to achieve short-run minimum costs, but the long-run costs would be much less. The increase in choices about how to produce in the long run means that long-run costs are equal to or less than short run costs, ceteris paribus. The term curves does not necessarily mean the cost function has any curvature. However, many economic models assume that cost curves are differentiable so that the LRMC is well-defined. Traditionally, cost curves have quantity on the horizontal axis of the graph and cost on the vertical axis. (Wikipedia).
Short-Run Cost Curves (Part 2)- Micro Topic 3.2
In this video I explain how to draw and analyze the cost curves. Most teacher sad professors focus on the per unit cost curves. That included marginal cost, average total cost, average variable costs, and the average fixed cost. Each have a specific shape. It might not be the most exciting
From playlist Micro Unit 3: Production, Cost, and Perfect Competition
Economies of Scale and Long-Run Costs- Micro Topic 3.3
In this video I explain the idea of what happens to output and costs in the long-run. I cover two similar but different ideas: increasing retruns to scale and economies of scale. The first one focuses on what happens to output and the second focuses on costs. I also cover t he idea of dis
From playlist Micro Unit 3: Production, Cost, and Perfect Competition
Find the Cost Function given the Marginal Cost and Fixed Costs
Please Subscribe here, thank you!!! https://goo.gl/JQ8Nys Find the Cost Function given the Marginal Cost and Fixed Costs
From playlist Calculus
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Episode 20B - Short Run vs. Long Run Production
In economics, what is the difference between the short run and the long run? "EPISODE 20B: Short Run vs. Long Run Production" by Dr. Mary J. McGlasson is licensed under a Creative Commons Attribution-NonCommercial-NoDerivs 3.0 Unported License.
From playlist Microeconomics modules
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Hey econ students. In this video I explain the short run and long run aggregate supply curves. In the short run, wages and resource prices don’t change when there's a change in price level. But, in the long-run, wages and resources prices adjust and the economy returns to full employment.
From playlist Macro Unit 3: AD-AS, National Income, and Price Determination
In this video we cover the idea of marginal cost. This is simply the derivative of the cost function. We can roughly define marginal cost as the cost of producing one additional item. For more videos please visit http://www.mysecretmathtutor.com
From playlist Calculus
Ex: Determine the Slope and Vertical Intercept of a Linear Cost Function
This video explains how to identify the slope and vertical intercept of a linear cost function.
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Ex: Function Inputs and Outputs of a Cost Function (Linear)
This video explains how to find the output of a cost function given the input and how to find the input given an output. Site: http://mathispower4u.com
From playlist Determining Linear Equations of Lines in Slope-intercept Form
Lec 11 | MIT 14.01SC Principles of Microeconomics
Lecture 11: Competition II Instructor: Jon Gruber, 14.01 students View the complete course: http://ocw.mit.edu/14-01SCF10 License: Creative Commons BY-NC-SA More information at http://ocw.mit.edu/terms More courses at http://ocw.mit.edu
From playlist MIT 14.01SC Principles of Microeconomics
MIT 14.01 Principles of Microeconomics, Fall 2018 Instructor: Prof. Jonathan Gruber View the complete course: https://ocw.mit.edu/14-01F18 YouTube Playlist: https://www.youtube.com/playlist?list=PLUl4u3cNGP62oJSoqb4Rf-vZMGUBe59G- This lecture covers the topics of perfect competition, shor
From playlist MIT 14.01 Principles of Microeconomics, Fall 2018
MIT 14.01 Principles of Microeconomics, Fall 2018 Instructor: Prof. Jonathan Gruber View the complete course: https://ocw.mit.edu/14-01F18 YouTube Playlist: https://www.youtube.com/playlist?list=PLUl4u3cNGP62oJSoqb4Rf-vZMGUBe59G- This lecture continues the discussion about producer theory
From playlist MIT 14.01 Principles of Microeconomics, Fall 2018
Thank you for watching my econ videos. In an AP or introductory college microeconomic course you must draw, shift, and explain a bunch of graphs, including: supply and demand, perfect competition, monopoly, monopolistic competition, monopsony, externalities and more. In this video I explai
From playlist Micro Unit 6: Market Failure and the Government
9. Supply and Demand & Consumer/Producer Surplus
MIT 14.01 Principles of Microeconomics, Fall 2018 Instructor: Prof. Jonathan Gruber View the complete course: https://ocw.mit.edu/14-01F18 YouTube Playlist: https://www.youtube.com/playlist?list=PLUl4u3cNGP62oJSoqb4Rf-vZMGUBe59G- This lecture covers supply and demand curves, consumer surp
From playlist MIT 14.01 Principles of Microeconomics, Fall 2018
Monopolistic competition and economic profit | Microeconomics | Khan Academy
Why it is hard for a monopolisitc competitor to make economic profit in the long run Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/microeconomics/perfect-competition-topic/monopolistic-competition-oligop/v/oligopolies-duopolies-collusion-and-cartels?utm_sourc
From playlist Firm behavior and market structure | AP Microeconomics | Khan Academy
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Hey econ students. In this video I go over the characteristics of perfect competition and explain how to draw and shift the graph. Make sure that you can calculate total revenue, total cost, and profit and show what happens on side-by-side graphs in both the short run and the long run. Als
From playlist Micro Unit 3: Production, Cost, and Perfect Competition
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This video briefly goes through the various pricing scenarios that a Perfectly Competitive firm might be faced with, and the resulting productions decisions, profit/loss, and long-run implications. Accompanies assigned worksheets.
From playlist Microeconomics modules
Long term supply curve and economic profit | Microeconomics | Khan Academy
Understanding the long term supply curve in terms of economic profit Watch the next lesson: https://www.khanacademy.org/economics-finance-domain/microeconomics/firm-economic-profit/average-costs-tutorial/v/fixed-variable-and-marginal-cost?utm_source=YT&utm_medium=Desc&utm_campaign=microec
From playlist Firm behavior and market structure | AP Microeconomics | Khan Academy
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In this video I show you how to derive the equations for the coefficients of the simple linear regression line. The least squares method for the simple linear regression line, requires the calculation of the intercept and the slope, commonly written as beta-sub-zero and beta-sub-one. Deriv
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