Figure

Short-Run Cost Curves

(a) The productivity of variable input factors determines the slope of both the total and variable cost curves. An increase (decrease) in fixed costs shifts the total cost curve upward (downward), but it has no effect on variable cost curves. (b) Marginal cost declines to Qr Both average total cost and average variable costs fall (rise) when marginal cost is lower (higher).

$ per time period

Fixed cost

Short-Run Cost Curves

(a) The productivity of variable input factors determines the slope of both the total and variable cost curves. An increase (decrease) in fixed costs shifts the total cost curve upward (downward), but it has no effect on variable cost curves. (b) Marginal cost declines to Qr Both average total cost and average variable costs fall (rise) when marginal cost is lower (higher).

Fixed cost

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