Relationships between a Firm's Short-run Costs of Production

This lesson focuses on just the per-unit cost curves, their shapes, and the relationships between them. As you will see, the marginal cost curve, itself shaped by the law of diminishing returns, intersects the average cost curves at their lowest points, which as we will see in later lessons enables producers to choose a level of output at which their per unit production costs are minimized, enabling firms to make decisions that allow them to optimize their output for profit-maximization.
Want to learn more about economics, or just be ready for an upcoming quiz, test or end of year exam? Jason Welker is available for tutoring, IB internal assessment and extended essay support, and other services to support economics students and teachers. Learn more here! econclassroom.com/?page_id=5870

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[@mostinho7]

Main takeaways
4:00 anytime the value of an additional unit is less than the average, it brings the average down
6:40 ATC = AVC + AFC, AFC represented by vertical distance between ATC and AVC on the graph is decreasing as quantity produced increases (AFC = total fixed cost / quantity produced)

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[@evan2902]

Thanks for this. I'm pretty much forced to take a general Econ course for my mass comm degree and let me tell you every last one of us (at least from my area of study) is struggling and literally half the class is gone. Professor just leaves us hanging like fuckin' lab rats trying to solve problems with minimal advice and input. At least with these, I feel like I've a chance of at least passing. Gonna recommend your videos to the remainder of the class ASAP!

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[@giselagier1072]

Hi Jason, your videos are so wonderfully explanatory and easy to follow thank you very much for these. My textbook says: Any point to the left of the SMC and SATC will mean unprofitability in the Long Term. Can you please explain this?

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[@lunayeahyeah9471]

Thank you!

[@ahmedalam5048]

Could you please link the previous lesson to this VDO

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Crystal clear

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Namaskaaram
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[@lecoqsf]

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[@farhan9632]

SIR, why is the TC curve U shaped?

[@Eliamma08]

Mohammad Farhan because of diminishing marginal returns. Producing additional unit will eventually increase the unit cost.

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[@aumnamahshivaya6086]

Ya

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[@claudiac479]

Wow I was studying my econ textbook for an hour to understand this and then I watch this video and he says "spreading the overhead" and then I realized I already knew all of this from accounting :(