Understanding Firm Short Run Cost Curves

Hi everyone in this video I look at understanding the firm’s short-run cost curves, so both identifying the curves and understanding their shape. This is a pretty long one, so for those wanting more content rather than less.
I address Total Costs (TC), Variable Costs (VC), Fixed Costs (FC), Marginal Costs (MC), Average Total Costs (ATC), Average Variable Costs (AVC) and Average Fixed Costs (AFC).
I skip explaining why MC intersects ATC and AVC at their minimum. I do have a video on this, it is here: • Why the Marginal Cost ...
Timestamps:
0:00 Introduction
0:27 Total, Fixed and Variable Costs
2:59 Explaining the Slopes of Total Cost Curve
6:28 Marginal Cost
8:30 Average Variable Costs
10:34 Average Fixed Costs
Hope you guys are doing well!! xo

[@Ok-li6mg]

THANK U SO MUCH THIS IS THE ONLY TOPIC I STRUGGLED THIS MUCH TO UNDERSTAND

[@WijthaGayan]

This is the first time I have actually subscribed to a channel. I really appreciate the way you explain this concept. You make it really easy to understand and learn. Thank you !

[@econhelp44]

Awesome, thank you! Sometimes I feel self conscious about my videos, but comments like these make it worth it and help me make more, thank you so much 🥰

[@youngg5099]

an absolutely phenomenal explanation of the cost curves. probably the best explanation of a topic I have ever seen on KZbin.

[@econhelp44]

This is such a lovely comment, thank you so much. I'm sorry about the late reply, I wanted to leave the comment on my analytics homepage for a bit so that I could see it (once I reply I don't see it on my analytics anymore). I hope that your studies went well! So happy to help, hope the studies went well ❤️❤️

[@zackgrey4472]

Summarized my first 2 weeks of a UCLA technology microeconomics class in 12 minutes, you're the best!!!

[@econhelp44]

Wow that’s awesome thanks so much for your comment! Good luck with your course, you’re going to do amazing!

[@divyanshagrawal3898]

This helped me out so much. I was really confused in class, but now I actually get what's going on. Thank you so much!

[@econhelp44]

Glad it helped! Class can be confusing, I know all about that. Good luck with your study keep up the good effort!! :)

[@tanmaychopra4239]

Marvellous. So beautifully explained! Subscribed!

[@econhelp44]

Thanks and welcome! You're comments are much appreciated!

[@mikailasurya]

this video is awesome!!! your explanation is perfect

[@econhelp44]

So happy to help! Thanks so much for your comment, hope you are doing well with your studies 👍🙏

[@sachithralakshani1110]

Useful. Appreciate your explanation.

[@econhelp44]

Glad it was helpful! Thanks!

[@alonakashtanov9408]

So very helpful, Thank you so much for this great explanation

[@econhelp44]

Glad it was helpful! Good luck with your study and thanks for the comment :)

[@bellewhite6996]

this was so helpful, thanks a bunch!

[@econhelp44]

You're so welcome! thanks for the comment ❤️❤️

[@ChampagneTina-gn7wn]

Fantastic! Awesome!

[@user-mi6bw4il1n]

Thank you, you are an amazing educator !!

[@econhelp44]

Aw too kind, thanks so much :)

[@Cain0023]

Sooo helpful for revision, thanks dude

[@econhelp44]

You're welcome, thanks for the comment! Good luck with your study :)

[@tubagusdaffaxi1216]

Thank you very much from Kyoto. Your explanation is very easy to understand😄

[@econhelp44]

I'm so glad! Thanks for letting me know, and good luck with your studies 👍👍

[@nelisafreitas739]

This is brilliant thank you so much, you are resourceful.

[@econhelp44]

You are very welcome 🙏 glad I could help

[@arshdeepsinghsidhu4973]

Nicely explained....💯

[@econhelp44]

Thanks so much!! 😁 so happy to help!

[@hasibhaidar51]

your videos are very helpfull ,thanks

[@econhelp44]

So nice of you to say! Thanks so much!

[@artemiss1675]

Thank u so much i really feel that i understood for the first timeeee

[@econhelp44]

Youre welcome! I'm so glad the video helped! ❤️❤️

[@Pidamoussouma]

Very good explanation ma'am... Thanks a lot

[@econhelp44]

Most welcome 😊 Good luck with your study!

[@mukib_khan_]

Best explanation 😊

[@econhelp44]

I’m so glad you think so!! ☺️ thanks for the comment ❤️

[@uzayrkhan9201]

Really helpful. Can you make a video explaining long run Costs and increasing and decreasing returns to scale?

[@econhelp44]

Yes! I will try. I have a baby at home atm but will try to do it quickly :)

[@Maps05]

Thank you , I so much understand this

[@econhelp44]

You're welcome! Thank you so much for the comment, I hope that your studies went well!

[@poojasenthil4859]

AHHHHH, I love you and thanks a lot for teaching me this concept. But it'd have been better if i had the data table

[@econhelp44]

Glad it helped! Thanks for the feedback I will take this on board :)

[@thuytrinh3970]

thank you !

[@user-ie6xi8ln4j]

really helpful thank you

[@econhelp44]

Glad it helped! thanks so much for the comment and good luck with your studies!

[@tarunverma7088]

Beautifully explained the diminishing marginal product

[@econhelp44]

Thank you for saying so! I appreciate the comment!

[@aroosaroos4343]

Thank you so much Ma'am ❤

[@econhelp44]

Most welcome 😊 thanks for the comment!

[@Lily-cl6zk]

amazing

[@econhelp44]

Thank you! Cheers! :)

[@davidayodele6046]

Very nice... nice voice too😊

[@econhelp44]

Thank-you! Good luck with your studies :) :)

[@goranpavloski845]

Can u makea video of how's the production function related to cost function

[@econhelp44]

Yes, I’ll try to do it soon, thanks for the suggestion

[@abhicasm]

Why mc cuts avc at the minimum point of avc i don't understand this topic ......plsss explain

[@econhelp44]

Hi Abhishek, I address this point here kzbin.info/www/bejne/Y5fLlWxpbdR-f9E when I discuss why MC intersects ATC at the minimum. It's the same logic for AVC, basically when MC > AVC, then AVC increases. When MC < AVC, AVC decreases. If MC = AVC, then AVC is stationary (stationary point is the turning point). Hope that helps!

[@abhicasm]

@@econhelp44 thank you mam

[@mahalaxmibadiguir9350]

In the long run all the cost should get covered. Then why afc doesnt touch x axis?

[@econhelp44]

These are just measures of costs. It doesn’t change if they are paid or not. My dinner cost me $10, before I paid for it and after I paid for it. Does that help?

[@lakhnooamerica9667]

How do I find level of output if I know the marginal cost?

[@econhelp44]

If perfect competition set p=mc if imperfect competition set mr=mc. Maybe this video will help: Understanding Profit Maximisation (with two examples) kzbin.info/www/bejne/mGrCgaNubLp_p68

[@BWV478]

I must be stupid but I don't understand why AVC goes up ... I would think that economy of scales makes any additional output less and less costly. Marginal cost should go down as companies improve they processes and labour get better at their jobs.

[@econhelp44]

You're not stupid! Thanks for the question, it's all about the increasing Marginal Cost of production due to diminishing Marginal Product because of the fixed input to production. If you understand/accept this, then it follows that Average Variable Costs increases - each unit becomes more and more expensive to make, Fixed Cost stays the same so it must be the Variable Cost component that increases, so Average Variable Costs must be increasing. Does that help?

[@BWV478]

@@econhelp44 I understand thanks! What I was missing was the 'fixed input to production'. Have a great day.

[@econhelp44]

Good job! Good luck with your studies 👍

[@econhelp44]

I'll also add (because I didn't read your first comment well enough!), economies of scale is a long run concept (so both inputs are variable), this video is just for the short run.

[@Margaretqian]

i understand the theory, can we explain it in maths proof ?

[@econhelp44]

Hi! I haven't seen anything like this. Part of the problems is that it's very difficult to find production equations that will have all of the features that I discuss in the video. What you see, in practice, is that economists chose functional forms in their models that exhibit some (or most) of the features that are important for their question (and which are easy to use - solvable at the least). For instance, Cobb-Douglas production functions exhibit diminishing MP in either Labour or Capital, and also can be written such that production exhibits constant returns to scale, increasing returns to scale or decreasing returns to scale (depending on the exact characterisation of the function). I hope that helps!!

[@CynthiaLouann]

still confused.......

[@econhelp44]

Sorry to hear that, feel free to ask a specific question I’ll try to help!

[@economi]

bits have poor explanation, such as AVC

[@econhelp44]

Thank you for your feedback

[@economi]

@@econhelp44 i feel bad, I was tryna rush the understanding whilst not being very good at economics. The video was good and I think you linked a video that helped to explain the issue, the video is good but I think I just required the extra mile to understand the process

[@econhelp44]

Aw that’s okay!! All feedback is good! I should have asked if you needed any more help, are you okay with your understanding now?