A) Discuss the relationships and properties of cost measures, Total Cost, Average Cost, Marginal Cost and Variable cost, etc. How important are these cost measures in production decisions. Give some real-world examples from your workplace.
B1) Explain what could cause a shift in the short run Average Cost curve from SAC1 to SAC3. Does this scenario apply to products made by your firm?
Figure 1: short run average cost curves
B2). Discuss the differences in following three Long Run Average Cost Curves (LRAC). Use the appropriate economic terminology. What is the shape of your company’s present LRAC? LRAC? Explain.
Figure 2: long run average cost curves