ECO/365 Production
which of the following are the reasons for breaking average total cost into two components?
-Average variable cost is used to determine whether a firm should continue to operate or should shut down in the short run. -They constantly declining average fixed cost is apparent.
In addition to total cost, it is useful to calculate average cost because:
-average cost can be compared directly to the price. -average cost numbers are more usable for managing.
The average _______ costs always declines with additional output, while the average ________ and average _______costs decline and then increase.
-fixed -variable -total
Total revenue minus the explicit cost of production is ________ profit
accounting
The fixed cost per unit is equal to:
average fixed cost
The vertical distance between the average variable cost and the average total cost curves gets smaller as more output is produced because this distance is equal to the:
average fixed cost, which declines as output increases.
Total cost divided by the amount of output produced is equal to:
average total cost
Total variable cost divided by the amount of output produced is equal to:
average variable cost.
Negative _________ profits encourage firms to exit the market.
economic
Monetary payments made by individuals, firms, and governments for the use of others' land, labor, capital, and entrepreneurial ability are _____costs.
explicit
Total revenue minus the total _______ costs of production is accounting profit.
explicit
When the marginal product increases, the marginal cost of production
falls
The opportunity costs of unsing owned resources are _________ costs.
implicit
If a company decides to product zero units of output:
it still has to pay fixed costs of production.
A curve showing the ________ average total cost possible for any given level of output when all inputs of prodcution are variable is the long-run average cost curve.
lowest
Total revenue equals:
price times quantity
total cost equals:
total fixed cost plus total variable cost
Costs that increase as production increases and decrease as production decreases are ______ costs.
variable
Total ________ costs change with output, whereas total ______costs do not.
variable; fixed