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#cfa #cfa-level-1 #economics #microeconomics #reading-13-demand-and-supply-analysis-introduction #study-session-4
The total variable cost (variable cost per unit times units produced) is measured by the area beneath the supply curve, and it is a little more complicated to understand. Recall that the supply curve represents the lowest price that sellers would be willing to accept for each additional unit of a good. In general, that amount is the cost of producing that next unit, called marginal cost
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3.10. Producer Surplus—Revenue minus Variable Cost
the total variable cost of producing that amount, on the other hand. Variable costs are those costs that change when the level of output changes. Total revenue is simply the total quantity sold multiplied by the price per unit. <span>The total variable cost (variable cost per unit times units produced) is measured by the area beneath the supply curve, and it is a little more complicated to understand. Recall that the supply curve represents the lowest price that sellers would be willing to accept for each additional unit of a good. In general, that amount is the cost of producing that next unit, called marginal cost . Clearly, a seller would never intend to sell a unit of a good for a price lower than its marginal cost, because she would lose money on that unit. Alternatively, a producer should be


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