This week we began to examine the supply side of the market by looking at firms’ costs of production in Chapter 13. There are a slew of different costs measures that economists look at when studying firm behavior. This week’s discussion will help cement these concepts
Pick a real world firm and identify an example of its variable costs and fixed costs. Explain the examples you selected
The shape (or more simply, the behavior) of firms’ costs is important to understanding some of the choices they make. Explain why a firm’s marginal costs are always rising, and why average total costs have a U-shape.