Economics

I'MaGadgetCo. produces and sells widgets. Last year, it produced 9,000 widgets and sold each one for $8. To produce the 9,000 widgets, the company incurred variable costs of $27,000 and a total cost of $36,000. I'MaGadgetCo's average fixed cost to produce 9,000 widgets was

$1.00

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

$2.43

_____________ include all of the costs of production that increase with the quality produced

Variable cost

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

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

Total revenue

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

average cost

Which of the following falls outside of the classification of business expenditures that fall into the category of variable costs?

costs of research and development

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

diminishing marginal returns

In microeconomics, the term _____________________ is synonymous with economies of scale.

increasing returns to scale

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

marginal cost

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

monopolistic competition

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

monopoly

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

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

quantity of output

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

total costs

_____________ 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