Timeline for What does the area defined by two different values for quantity under a supply curve represent?
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6 events
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| Feb 6, 2017 at 16:08 | comment | added | Dirk | I see that there is a misunderstanding between long run and short equilibrium. For long run equilibrium one has to consider fixed costs. That's why your first answer is confusing and wrong interpretation. I interpret the area under the supply curve in the link as e.g. the cost of next 50 Mil. Gallons of Gasoline for increasing supply from 550 to 600 Gallons of Gasoline. | |
| Feb 6, 2017 at 14:40 | comment | added | Bayesian | Interpreting the supply curve as mentioned above, the meaning of this area is as described above. | |
| Feb 6, 2017 at 14:08 | comment | added | Dirk | A supply curve for gasoline: khanacademy.org/economics-finance-domain/microeconomics/… For example: the area between a=500 and b=550. So, the area under the corresponding region doesnt have a meaning? | |
| Feb 6, 2017 at 12:49 | comment | added | Bayesian | Not sure what you are calculating here. Total cost C(q)=VC(q)+FC, AC=C(q)/q, MC(q)= C'(q)=VC'(q). The supply curve is a part of MC. Maybe coming from the producer surplus(PS) angle. Profit = PS -FC and alternatively Profit = PQ- C= PQ- VC-FC. Now PQ is a retangle divided by the supply curve. PS is the part above the supply curve. PQ=PS+VC. | |
| Feb 6, 2017 at 12:15 | comment | added | Dirk | Thanks for your reply and for mentioning about the fixed costs. I think it can't be the variable cost. Let us assume function f(VC) that AC=f(VC)=VC.Q+FC. Average Cost (AC), Variable Cost (VC), Quantity (Q) and FC (Fixed Cost). The area of the trapezoid equals to (f(a)+f(b))/2*(b-a). I claim that this equals to the cost of supply given range of supply (b-a) | |
| Feb 6, 2017 at 12:00 | history | answered | Bayesian | CC BY-SA 3.0 |