Cost curves

Fixed cost

This part of the cost does not depend on the output target y set by the firm and do not vanish when y=0

Sunk fixed costs : these are not recovered if the firm shuts down and exists the market

Fixed recoverable costs: these costs can be partially recovered if the firm should cease its activity

Variable costs

This part of the cost does depend on the output target y set by the firm and varnishes when y=0

These costs measure the expenditure of the firm to purchase the inputs in the cost minimising amounts characterised

Total cost curve

𝐶𝑦 =𝐹+𝑉𝐶(𝑦)

Average cost curve

:

𝐴𝐶𝑦 =𝐶(𝑦) /𝑦

𝐴𝐶𝑦 =𝐴𝐹𝐶𝑦 +𝐴𝑉𝐶(𝑦)