Answer to Question #208060 in Microeconomics for Mubashir Ameenudee

Question

I. Illustrate the link between the cost-minimization problem and total cost curve. What would happen to the total cost curve if the firm increases level of output?

Answer 1

Total cost (TC) is a set of fixed and variable costs of a firm.

Total costs are a function of the output:

TC=FC+VCTC=FC+VC

The total cost is graphically obtained by summing the constant and variable cost curves.

Cost reduction is a technique for achieving the most cost-effective method of providing goods and services of the required quality. Profits and cash flow improve as costs are reduced. Whole cost refers to the total amount of money spent by a company to produce particular goods and services. For a company to maximize profits, cost minimization is critical.