⚙ From Production to Costs
How the production function and wage together determine every cost curve
Total Product
Q = f(L)
Total Revenue & Total Cost
vs Q
TR
TC
VC
Marginal & Average Product
vs L — hover to explore 🔍
MP
AP
Cost Curves & Profit Max
vs Q — hover to explore 🔍
P = MR
MC
ATC
AVC
📈 Market Price
Price (P)
$15.00
P = MR = AR (price taker)
🔥 Input Costs
Wage (w)
$10
Fixed Cost (FC)
$30
Changing wage shifts all cost curves!
TC = FC + wL
MC = w / MP | AVC = w / AP
🔧 Technology
α (linear)
0.80
β (quadratic)
-0.060
γ (cubic)
0.0040
L(Q) = αQ + βQ² + γQ³
Shapes MP & AP (technology only)
📊 At Optimal Q*
Q*
—
L*
—
MC
—
ATC
—
AVC
—
MP at L*
—
Economic Profit
—
Decision:
Adjust parameters to see.
Key connection:
MC = w/MP and AVC = w/AP link the two rows.