# Economics: Micro and Macro Theory and Application

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Economics: Micro and Macro Theory and Application
Outcome1

1.
In economics, and cost accounting, total cost (TC) describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, plus fixed costs, which are independent of the quantity of a good produced and include inputs (capital) that cannot be varied in the short term, such as buildings and machinery.

TC = FC + VC

Average cost equals to total cost divided by the number of goods produced (output). It is also a sum of average variable costs plus average fixed costs. Average costs may dependent on the time period considered. Average costs are a fundamental component of supply and demand.

AC = TC / Output

Marginal Costs are the costs for producing one more unit of a good. It is calculated by looking at the difference between levels of Total Costs. In general terms, marginal cost at each level of production includes any additional costs required to produce the next unit. For example, if producing additional vehicles requires building a new factory, the marginal cost of the extra vehicles includes the cost of the new factory.

2.

Oligopoly is a form of market structure different from perfect competition, where there is a significant number of small competitors, and from a pure monopoly, where there is only one giant company. The dominant form of oligopoly in developed countries when there is only few large producers of the good or service providers. Good example is the gaming market where there are 3 big gaming system producers: Sony, Microsoft and Nintendo sharing almost the whole market among each other.

A characteristic feature of oligopoly is the lack of price competition between the participants in that market. The competition is held in other areas (quality,…...

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