1. Fixed costs (FC): Cost incurred regardless of the level of production, even if the level of production is zero. 2.

GRAPH of FC 3. Variable Costs (VC): Cost that is zero at production and increases as production increases 4. GRAPH of VC 5. Marginal Costs (MC or TC ): Change in total cost caused by the production of one additional unit 6. GRAPH of VC 7. Average costs (AC): Total costs dived by the number of units produced (TC/q) 8. GRAPH of AC 9. Graph showing the long-run supply curve of an industry with decreasing costs 10. Graph showing long run supply function of an industry with constant costs 11. Verbal description of elasticity of supply of the function above 12. Graph illustrating industry with a fixed supply 13. Verbal description of elasticity of supply of the function above 14. Df 15. From a marginal utility perspective: Seats are sold to individuals who perceive value for their purchase. The cheap seats are overpriced for people who would buy cheap seats. The expensive seats are underpriced for consumers that would buy expensive seats. The recommendation is to lower the cost of the cheap seats to ensure that each type of consumer gets closer to the their respective MU 16.