Chapter 7 - Microeconomics

____________ tells a firm whether it can earn profits given the price in the market.

Average cost

_____________________ help to explain why every economy, as it develops, has an increasing proportion of its population living in urban areas.

Agglomeration factors

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

Total costs

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 ______________ of all firms can be broken down into some common underlying patterns.

cost structure

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

either total cost or variable cost

Economies of scale may arise from all but one of the following. Which one is it?

government economic subsidies protect firms from competition to avoid losses.

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?

physical space for the gallery

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

short run; cannot alter them

In order to determine the average variable cost, the firm's variable costs are divided by _______________________.

the quantity of output