AP Econ Chapter 8 Test
What is fixed cost?
does not change with changes in output (rent)
What happens to TVC in the short run?
it will increase for a time at a diminishing rate, buy beyond some pint will increase at a increasing rate
If the amount of variable resources needed to produce any level of output go down, the MC curve will...
shift downward
What is the TC-TVC?
total fixed cost
For most producing firms:
average total costs decline as output is carried to a certain level, and then begin to rise
Total Fixed Cost:
does not change as total output increases or decreases.
The law of diminishing returns results in:
a total product curve that eventually increases at a decreasing rate
What are the short run production costs?
Fixed cost, variable cost, total cost, and marginal cost
True or false?
Marginal cost intersects average total cost at the latter's minimum point
How do you find economic costs?
Take total revenue and subtract by explicit and implicit costs (all costs)
How do you find average product?
Total product subtracted by # of workers
What is marginal cost?
additional cost of producing one more unit of a product
Fixed Cost is...
any cost which does not change when the firm changes it's output
The law of diminishing returns indicates that:
beyond some point extra utility derived from additional units of a product will yield the consumer smaller and smaller amounts of utility
Marginal Cost is...
change in total cost that results from producing one more unit of output (change in TC)
Average fixed cost:
declines continually as output increases
What is variable cost?
going to change when you make more product (labor)
Explain the movement of Marginal Product
may initially increase, then diminish, and ultimately become negative
What is total cost?
sum of fixed cost and variable cost
Normal Profit is...
the return to the entrepreneur when economic profits are 0, a return for the entrepreneur's labor
Marginal Product is...
total profit divided by the number of workers employed
How do you find fixed costs on a diagram?
vertical distance between AVC and ATC