The five basic cost curves that SEGAO Bricks will experience are:
1. Total Cost (TC) Curve: The total cost curve represents the relationship between the total cost of production and the quantity of output produced. It shows how the total cost changes as the level of production changes.
2. Marginal Cost (MC) Curve: The marginal cost curve represents the additional cost incurred by producing one more unit of output. It shows how the cost of producing each additional unit changes as the quantity of output increases. The marginal cost curve is derived from the change in total cost divided by the change in quantity.
3. Average Total Cost (ATC) Curve: The average total cost curve represents the average cost per unit of output. It is calculated by dividing the total cost by the quantity of output. The average total cost curve shows how the average cost changes as the level of production increases.
4. Average Variable Cost (AVC) Curve: The average variable cost curve represents the variable cost per unit of output. It is calculated by dividing the variable cost by the quantity of output. The average variable cost curve shows how the variable cost per unit changes as the level of production increases.
5. Average Fixed Cost (AFC) Curve: The average fixed cost curve represents the fixed cost per unit of output. It is calculated by dividing the fixed cost by the quantity of output. The average fixed cost curve shows how the fixed cost per unit changes as the level of production increases.
The equation MC = MR represents the condition for profit maximization in a perfectly competitive market. It states that a firm should produce at the quantity where the marginal cost (MC) equals the marginal revenue (MR). This ensures that the firm is maximizing its profit by producing the optimal quantity of output at which the additional revenue generated by producing one more unit (MR) is equal to the additional cost incurred (MC).