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Static efficiency
Published in Peter M. Schwarz, Energy Economics, 2023
Average total cost (ATC) is an average of all costs. Short-run average total cost (SRATC) is short-run total cost (SRTC) divided by output (Q): () SRATC=SRTCQ=TFC+TVCQ=AFC+AVC Decision-making based upon short-run average cost may lead to decisions that deviate from maximum profit because they include fixed cost. Average fixed cost (AFC) is overhead, which decreases as it is spread out over more units. Since fixed cost does not change with output, average fixed cost is also irrelevant to short-run decision-making. A firm must cover average variable cost (AVC) to justify short-run production.
Cost and Production Analysis: The General Concepts
Published in Bijan Vasigh, Ken Fleming, Thomas Tacker, Introduction to Air Transport Economics, 2018
Bijan Vasigh, Ken Fleming, Thomas Tacker
If we divide the total cost function by output, we obtain another important category of costs, called the average costs (Boyes, 2004). By definition, then, average total cost is the total amount of costs (both fixed and variable) per unit of output. Average fixed cost is the fixed costs per unit of output, and average variable cost is the total variable costs per unit of output. Because fixed costs remain constant regardless of output, average fixed costs will decrease with increases in output, since the fixed costs are spread out over a greater range of outputs. This provides an incentive for a firm to increase output if it has high levels of fixed costs. Average variable costs tend to decrease over the first units of production (since so few units are initially produced) and then increase as production increases. Finally, average total costs will behave like average variable costs since they are made up of fixed and variable costs. The formula below describes the relationship between average total costs, average variable costs, and average fixed costs (maurice and Thomas, 2005): ATc = AFC + AVC
Airline Cost Classifications
Published in Bijan Vasigh, Ken Fleming, Liam Mackay, Foundations of Airline Finance, 2018
Bijan Vasigh, Ken Fleming, Liam Mackay
As mentioned in the section on fixed costs, as output increases for the same number of fixed inputs, the average fixed cost decreases. Thus, the concept of productivity implies that each input is able to produce more output and therefore average costs decrease. There are many ways by which airlines can increase productivity. One obvious way to become more productive is to increase the daily utilization rate of the aircraft. The aircraft utilization rates for 2008 for eleven major U.S. carriers are shown in Figure 2.8. JetBlue (B6) and Frontier (F9) have the highest utilization rate of major U.S. airlines shown in Figure 2.8, allowing them to spread the fixed costs of the aircraft over a greater amount of production.
Optimal design of pure battery electric bus system on the grid network
Published in Transportmetrica A: Transport Science, 2022
Xin Li, Yanhao Li, Wanying Liu, Yun Yuan
The critical findings can be summarised from Figure 6 as follows: BEB services operate at a lower system cost as demand density increases in all cases because more users will lower the average fixed cost of infrastructure, especially regarding charging infrastructures. In this study, the system cost is averaged by passengers. And, the cost per passenger is observed to be decreased along with an increase in passenger demand, as the expected increase of such averaged cost resulting from an increase in bus fleet size would be compensated by an expansion of demand size.In line with previous studies (Fan, Mei, and Gu 2018; Li et al. 2020), cities with higher VOT enjoy more benefits of cost savings when deploying electric buses.More electric buses are naturally required for all types of VOT to meet the increasing travel demand. However, cities with high VOT require more electric buses than cities with low VOT.
Techno-economic assessment of gas pressure-based electricity generation (A case study of Iran)
Published in Energy Sources, Part A: Recovery, Utilization, and Environmental Effects, 2018
Ali Rahmatpour, Mohammad Javad Shaibani
There is a significant potential for power recovery at Zob Ahan reduction station. To prevent hydrate formation, it is always necessary to increase the gas temperature. This can increase the operating costs for such units. It should be noted that larger units have a lower average fixed cost compared to smaller units. Generally, the larger units with more electricity production are more economically viable. However, the annual operating hours can affect economic justification. As the economic analysis showed case I with 7200 operative hours in a year is more feasible than case II with 5040 annually working hours.
An online community-based dynamic customisation model: the trade-off between customer satisfaction and enterprise profit
Published in International Journal of Production Research, 2021
Yu Wang, Jiacong Wu, Li Lin, Sara Shafiee
Table 7 illustrates that the optimal fitness value () was 0.6847 and 0.6707 when increasing the number of designable attributes and increasing the number of selectable attributes, respectively. An increase in the number of designable attributes can significantly improve customer satisfaction, while an increase in the number of selectable attributes mainly improves enterprise profit. However, in the above discussion, the enterprise's operational condition was not considered. Therefore, it was necessary to provide different customisation strategies for the enterprise in light of different circumstances, as follows: When customer churn rate is high, the enterprise should invest a certain amount of funds in the development of the customisation degree of designable attributes. Developing the designable attributes can better meet the demand of OCCs, especially those with high-customisation-degree expectations that have not yet been satisfied by the enterprise. Therefore, the enterprise could improve current customer loyalty and reduce customer turnover.When the enterprise is in a period of relatively tight funding, it should invest in the development of preferentially selectable attributes. The cost of increasing the number of selectable attributes is obviously less than the cost of increasing the number of designable attributes, and yet it still helps increase customer demand in each community. Accordingly, the enterprise can expand the scale of a single production and reduce the average fixed cost to survive or earn more profit in the customisation market.