Econ chapter 11
Adam spent $10,000 on new equipment for his small business. Membership at his fitness center is very low and at this rate, Adam needs an additional $12,000 per year to keep his studio open. Which of the following is true?
The $10,000 Adam spent on new equipment is a fixed cost of business and the $12,000 he'll need to continue operations is a variable cost
The production function shows
The maximum output that can be produced from each possible quantity of inputs
Marginal cost is the
additional cost of producing an additional unit of output
A characteristic of the long run is
all inputs can be varied
Economic cost of production differ from accounting costs in that
economic costs adds the opportunity cost of a firm using its own resources while accounting cost does not
If, when a firm doubles all its inputs, its average cost of production decreases, then production displays
economies of scale
The law of diminishing marginal returns
explains why the average total cost and marginal cost curves are U-shaped in the short run
The minimum efficient scale is
level of operation where long run average costs are lowest
When the marginal product of labor rises
the marginal cost of production falls
Which of the following costs will not change as output changes
total fixed cost
Which of the following equations is correct?
AFC+AVC=ATC