Production, Cost, and the Perfect Competition Model

Average fixed cost

Total variable cost

Average total cost

Marginal cost

Long-run-average-cost remains constant regardless of production levels.

Long-run average costs decrease before eventually increasing again.

Long-run Average Cost increases and continue rising indefinitely.

Long-run-average-cost decreases without bound as production rises further.

Average total costs decline as inputs are added because fixed costs are spread over more units.

Average fixed costs remain unchanged as more workers are hired leading to consistent production levels per worker employed.

Average total costs rise due to increased use of technology over labor inputs leading to higher capital costs per unit produced.

Marginal product declines as each additional unit requires more input than the previous one lowering overall efficiency and raising costs per unit produced.

Fixed cost

Variable cost

Sunk cost

Total cost

TC = MC + ATC

TC = AFC + AVC

TC = TR - Profit

TC = FC + VC

Immediate reduction pollution reaches sustainable levels quickly without significant economic disruption major industries.

Complete shift industry standards towards green technologies occurs seamlessly rapidly benefiting environment economy equally.

All polluting industries become unprofitable shut down thereby solving environmental issues without any need further governmental action subsidies innovations.

Higher production costs leading companies pass these expenses onto consumers resulting possibly decreased overall consumption certain goods.

Consumer surplus increases as a single firm can often produce more optimal quality products.

Consumer surplus increases as more efficient firms lead to lower costs.

Consumer surplus is typically lower due to higher prices and less choice.

Consumer surplus is unaffected as scale economies lead to lower prices and more choice.

By selecting the project with the highest initial investment requirement disregarding profitability.

By comparing foregone profits from not pursuing each alternative project separately.

Evaluating which project will result in a shorter payback period without considering other factors.

Choosing the project aligned with the company's long-term goals irrespective of financial implications.

Marginal Cost

Variable Cost

Fixed Cost

Opportunity Cost

Fixed costs rise as firms invest more heavily in automated technology instead of human labor driving up capital expenditures in response.

Firms experience increased variable costs due to higher wages paid to laborers potentially reducing employment levels or hours worked.

Variable costs remain constant but total revenues fall as consumer spending power is diluted across multiple industries with such mandates.

Firms benefit from reduced turnover rates which decreases total average cost despite paying workers more than before.