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101 lecture 13

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Gale Pooley

This document provides an overview of key concepts related to costs of production in microeconomics. It defines total cost, fixed costs, variable costs, average costs and marginal costs. It includes examples and graphs to illustrate the relationships between these different cost concepts and how they change with varying levels of output. The summary discusses the importance of determining the efficient scale of production to minimize average total costs and the potential for economies and diseconomies of scale between the short-run and long-run.

Economy & Finance
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Microeconomics Lecture 13 ! The Costs of Production
Key Terms total cost profit explicit costs implicit costs economic profit accounting profit production function marginal product diminishing marginal product fixed costs variable costs average total costs average fixed costs average variable costs marginal costs efficient scale economies of scale diseconomies of scale constant returns to scale
Riyadh Pizza Company
Total Cost TC
Total Cost TC The market value of all of the inputs a firm uses in production
Total Revenue TR
Total Revenue TR Price x Quantity ! TR = P x Q
Profit PR
Profit PR Total Revenue minus Total Cost ! PR = TR - TC
Production Function
Production Function The relationship between inputs and outputs
Marginal Product
Marginal Product Additional output of a unit of input
Diminishing Marginal Product
Diminishing Marginal Product Marginal product declines as input increases
Fixed Costs FC
Fixed Costs FC Costs that do not vary with output
Variable Costs VC
Variable Costs VC Costs that do vary with output
Total Costs TC
Total Costs TC Fixed costs plus variable costs ! TC = FC + VC
Average Total Costs ATC
Average Total Costs ATC Total costs divided by quantity of output ATC = TC ÷ Q
Average Fixed Costs AFC
Average Fixed Costs AFC Fixed costs divided by quantity of output AFC = FC ÷ Q
Average Variable Costs AVC
Average Variable Costs AVC Variable costs divided by quantity of output AVC = VC ÷ Q
Marginal Cost MC
Marginal Cost MC The increase in total cost for the next unit MC = ΔTC ÷ ΔQ
101 lecture 13
Q 0 1 2 3 4 5 6 7 8 9 10
Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100
Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420
Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520
Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10
Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10 Average Variable Cost AVC VC ÷ Q 20.0 19.5 19.7 21.0 24.0 26.7 30.3 33.8 37.8 42.0
Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10 Average Variable Cost AVC VC ÷ Q 20.0 19.5 19.7 21.0 24.0 26.7 30.3 33.8 37.8 42.0 Average Total Cost ATC TC ÷ Q 120.0 69.5 53.0 46.0 44.0 43.3 44.6 46.3 48.9 52.0
Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10 Average Variable Cost AVC VC ÷ Q 20.0 19.5 19.7 21.0 24.0 26.7 30.3 33.8 37.8 42.0 Average Total Cost ATC TC ÷ Q 120.0 69.5 53.0 46.0 44.0 43.3 44.6 46.3 48.9 52.0 Marginal Cost MC ΔTC ÷ ΔQ 20 19 20 25 36 40 52 58 70 80
600 570 540 510 480 450 420 390 360 330 300 270 240 210 180 150 120 90 60 30 0 Total Cost Curve 0 1 2 3 4 5 6 7 8 9 10
Explicit Costs
Explicit Costs Costs that require money
Implicit Costs
Implicit Costs Costs that do not require money
Accounting Profit
Accounting Profit Total Revenue minus explicit costs
Economic Profit
Economic Profit Total Revenue minus both explicit costs and implicit costs
100 75 50 25 0 Accounting Profit = Total Revenue - Explicit Costs 100 - 30 = 70 Economic Profit = Total Revenue - Explicit Costs - Implicit Cost 100 - 30 - 40 = 30 Accounting Profit Economic Profit
Efficient Scale
Efficient Scale The quantity of output that minimizes average total cost
Short Run vs. Long Run
Short-Run
Short-Run Cannot change a fixed cost
Long-Run
Long-Run Can change all costs ! All costs become variable
Economies of Scale
Economies of Scale Long-run average costs fall as quantity of output increases
Diseconomies of Scale
Diseconomies of Scale Long-run average costs rise as quantity of output increases
Constant Returns to Scale
Constant Returns to Scale Long-run average costs stays the same as quantity of output increases
Break Even Analysis Qty SAR
Break Even Analysis Qty SAR Fixed Cost - must pay regardless of quantity
Break Even Analysis Qty SAR Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
Break Even Analysis Qty SAR Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
Break Even Analysis Qty SAR Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
Break Even Analysis Qty SAR Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Fixed Cost
Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Fixed Cost
Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Fixed Cost Fixed Cost plus Variable Cost
Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost Loss
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Cost Loss Profit Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Cost Loss Profit Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Cost Loss Profit Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q 5 = Q
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q 5 = Q 5
Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q 5 = Q 5 1000

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101 lecture 13

  • 1. Microeconomics Lecture 13 ! The Costs of Production
  • 2. Key Terms total cost profit explicit costs implicit costs economic profit accounting profit production function marginal product diminishing marginal product fixed costs variable costs average total costs average fixed costs average variable costs marginal costs efficient scale economies of scale diseconomies of scale constant returns to scale
  • 5. Total Cost TC The market value of all of the inputs a firm uses in production
  • 7. Total Revenue TR Price x Quantity ! TR = P x Q
  • 9. Profit PR Total Revenue minus Total Cost ! PR = TR - TC
  • 11. Production Function The relationship between inputs and outputs
  • 13. Marginal Product Additional output of a unit of input
  • 15. Diminishing Marginal Product Marginal product declines as input increases
  • 17. Fixed Costs FC Costs that do not vary with output
  • 19. Variable Costs VC Costs that do vary with output
  • 21. Total Costs TC Fixed costs plus variable costs ! TC = FC + VC
  • 23. Average Total Costs ATC Total costs divided by quantity of output ATC = TC ÷ Q
  • 25. Average Fixed Costs AFC Fixed costs divided by quantity of output AFC = FC ÷ Q
  • 27. Average Variable Costs AVC Variable costs divided by quantity of output AVC = VC ÷ Q
  • 29. Marginal Cost MC The increase in total cost for the next unit MC = ΔTC ÷ ΔQ
  • 31. Q 0 1 2 3 4 5 6 7 8 9 10
  • 32. Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100
  • 33. Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420
  • 34. Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520
  • 35. Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10
  • 36. Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10 Average Variable Cost AVC VC ÷ Q 20.0 19.5 19.7 21.0 24.0 26.7 30.3 33.8 37.8 42.0
  • 37. Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10 Average Variable Cost AVC VC ÷ Q 20.0 19.5 19.7 21.0 24.0 26.7 30.3 33.8 37.8 42.0 Average Total Cost ATC TC ÷ Q 120.0 69.5 53.0 46.0 44.0 43.3 44.6 46.3 48.9 52.0
  • 38. Q 0 1 2 3 4 5 6 7 8 9 10 Fixed Cost FC 100 100 100 100 100 100 100 100 100 100 100 Variable Cost VC 20 39 59 84 120 160 212 270 340 420 Total Cost TC FC + VC 100 120 139 159 184 220 260 312 370 440 520 Average Fixed Cost AFC FC ÷ Q 100 50 33 25 20 17 14 13 11 10 Average Variable Cost AVC VC ÷ Q 20.0 19.5 19.7 21.0 24.0 26.7 30.3 33.8 37.8 42.0 Average Total Cost ATC TC ÷ Q 120.0 69.5 53.0 46.0 44.0 43.3 44.6 46.3 48.9 52.0 Marginal Cost MC ΔTC ÷ ΔQ 20 19 20 25 36 40 52 58 70 80
  • 39. 600 570 540 510 480 450 420 390 360 330 300 270 240 210 180 150 120 90 60 30 0 Total Cost Curve 0 1 2 3 4 5 6 7 8 9 10
  • 41. Explicit Costs Costs that require money
  • 43. Implicit Costs Costs that do not require money
  • 45. Accounting Profit Total Revenue minus explicit costs
  • 47. Economic Profit Total Revenue minus both explicit costs and implicit costs
  • 48. 100 75 50 25 0 Accounting Profit = Total Revenue - Explicit Costs 100 - 30 = 70 Economic Profit = Total Revenue - Explicit Costs - Implicit Cost 100 - 30 - 40 = 30 Accounting Profit Economic Profit
  • 50. Efficient Scale The quantity of output that minimizes average total cost
  • 51. Short Run vs. Long Run
  • 53. Short-Run Cannot change a fixed cost
  • 55. Long-Run Can change all costs ! All costs become variable
  • 57. Economies of Scale Long-run average costs fall as quantity of output increases
  • 59. Diseconomies of Scale Long-run average costs rise as quantity of output increases
  • 61. Constant Returns to Scale Long-run average costs stays the same as quantity of output increases
  • 63. Break Even Analysis Qty SAR Fixed Cost - must pay regardless of quantity
  • 64. Break Even Analysis Qty SAR Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
  • 65. Break Even Analysis Qty SAR Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
  • 66. Break Even Analysis Qty SAR Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
  • 67. Break Even Analysis Qty SAR Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
  • 68. Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
  • 69. Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity
  • 70. Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Fixed Cost
  • 71. Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Fixed Cost
  • 72. Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Fixed Cost Fixed Cost plus Variable Cost
  • 73. Break Even Analysis Qty SAR 500 Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
  • 74. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
  • 75. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
  • 76. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
  • 77. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost
  • 78. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable Cost Loss
  • 79. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Cost Loss Profit Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable
  • 80. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Cost Loss Profit Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable
  • 81. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Cost Loss Profit Total Cost = 500 + 100 x Q Total Cost = FC + VC x Qty Fixed Cost - must pay regardless of quantity Variable Cost - must pay with each increase in quantity Total Revenue = Price x Qty Fixed Cost Fixed Cost plus Variable
  • 82. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q
  • 83. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue
  • 84. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q
  • 85. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q
  • 86. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q
  • 87. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q 5 = Q
  • 88. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q 5 = Q 5
  • 89. Break Even Analysis Qty SAR 500 Total Revenue = 200 x Q Total Cost = 500 + 100 x Q Total Cost = Total Revenue 500 + 100 x Q = 200 x Q 500 + 100Q = 200Q 500 = 100Q 5 = Q 5 1000