The cost of energy is both fixed and variable in nature Change in the average and marginal cost curve in case of an increase in the fixed cost Nature of cost of corn for ethanol producer Change in the average and marginal cost curve in case of an increase in the variable cost Concept Introduction: Fixed Cost - A cost which does not change with an increase or decrease in units produced and it remains constant. Fixed costs need to be paid even when there is no production. Variable Cost − This is a cost which varies with number of units produced. Total Cost − This is the sum of total fixed and variable costs Average Total Cost − This is calculated by dividing the total cost from the number of units produced

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Chapter 11, Problem 1P

To determine

To Discuss:

The cost of energy is both fixed and variable in nature

Change in the average and marginal cost curve in case of an increase in the fixed cost

Nature of cost of corn for ethanol producer

Change in the average and marginal cost curve in case of an increase in the variable cost

Concept Introduction:

Fixed Cost - A cost which does not change with an increase or decrease in units produced and it remains constant. Fixed costs need to be paid even when there is no production.

Variable Cost − This is a cost which varies with number of units produced.

Total Cost − This is the sum of total fixed and variable costs

Average Total Cost − This is calculated by dividing the total cost from the number of units produced

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