Chapter
20
Cost
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
20­1
Chapter
Objectives
Fixed
cost,
variable
cost,
and
total
cost
Marginal
cost
Short
run
and
long
run
Shut­down
and
go­out­of­business
decisions
Average
cost
Graphing
the
AFC,
AVC,
ATC,
and
MC
curves
The
law
of
diminishing
returns
Economies
and
diseconomies
of
scale
The
long­run
planning
envelope
curve
Copyright
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
20­2
Costs
Sales
­
Costs
=
Profit
or
Total
Revenue
­
Total
Cost
=
Profit
or
Total
Revenue
­
Total
Cost
Profit
Copyright
(Bottom Line)
2002 by The McGraw­Hill Companies, Inc.
All rights reserved.
20­3