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