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3.4 How can we calculate the costs of a firm?

What students need to learn:

Students should be able to:
Additional Guidance Notes
Illustrate and perform simple calculations using total cost; total fixed cost; total variable cost; average total cost; average fixed cost; average variable cost and marginal cost.
Students will need to be able to draw and interpret cost curves; distinguish between short run and long run costs; and explain the shape of the average cost curve in terms of diminishing marginal returns and economies of scale.

Students will not require a knowledge of marginal product theory to explain costs.
Economies and
diseconomies of scale
Identify economies and diseconomies of scale.
Students must be able to distinguish and give examples of internal and external economies and diseconomies of scale.

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