5

If this information were used to create a total cost graph, the curve should

reflect all of the above.

If the firm sells 5 units at a price of $30 each, then the marginal unit produced

costs more than the average cost.

The term _____________ is used to describe the additional cost of producing one more unit.

marginal cost

Which of the following should typically be ignored because spending has already been made and cannot be changed?

sunk costs

I'MABigCorp. produces and sells kitchen wares. Last year, it produced 7,000 can openers and sold each one for $6. To produce the 7,000 can openers, the company incurred variable costs of $28,000 and a total cost of $45,000. I'MABIGCorp.'s average fixed cost to produce the 7,000 can openers was

$2.23

The table below sets out cost information for the production of volley balls. Some values are missing. Which of the following statements is correct?

A = 42, E = 12

____________________________ occur when the marginal gain in output diminishes as each additional unit of input is added.

Diminishing marginal returns

______________ include all of the costs of production that increase with the quantity produced.

Variable costs

In economics, a firm that faces no competitors is referred to as

a monopoly

The graph above illustrates the total cost function for GoodieCookie Co. How are the company's fixed costs represented in this graph?

as the point where the total cost curve touches the vertical axis

In order to determine ____________, the firm's total costs must be divided by the quantity of its output.

average cost

The _____________________ curve will always lie below the curve for average cost because average cost includes _____________ in the numerator of the calculation.

average variable cost; fixed costs

The term __________________ describes a situation where the quantity of output rises, but the average cost of production falls.

economies of scale

When __________________ exist, doubling of all inputs will result in more than doubling output, which means _______________________

economies of scale; a larger factory can produce at a lower average cost than a larger company.

In order to calculate marginal cost, the change in ______________ is divided by the amount of change in quantity.

either total cost or average cost

The term "constant returns to scale" describes a situation where

expanding all inputs does not change the average cost of production

A firm's ___________ consist of expenditures that must be made before production starts that typically, over the short run, _______________ regardless of the level of production.

fixed costs; do not change

The economies-of-scale curve is a long-run average cost curve, because

it allows all factors of production to change

Fixed costs are important because, at least in the ___________, the firm _______________.

long run; cannot alter them

If the firm produces 5 units that it sells at a price of $30.00 each, what will its profits or losses equal?

losses equal $15

________________________ arises where many firms are competing in a market to sell similar but differentiated products.

monopolistic competition

Marcella operates a small, but very successful art gallery. All but one of the following can be classified as a variable cost arising from the physical inputs Marcella requires to operate her business. Which is it?

phys space to put it

Why would labor be treated as a variable cost?

producing larger quantities of a good or service generally requires more workers

___________ include all spending on labor, machinery, tools, and supplies purchased from other firms.

total costs

Whatever the firm's quantity of production, _____________ must exceed total costs if it is to earn a profit.

total revenue

_____________ is calculated by taking the quantity of everything that is sold and multiplying it by the sale price.

total revenue

The marginal cost curve is generally ______________, because diminishing marginal returns implies that additional units are ________________________.

upward-sloping; more costly to produce

If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?

variable costs