Econ Chapter 3

TC

FC+VC

AFC

FC/Q

Average revenue for a firm is total revenue

(P X Q) divided by the quantity (Q)

The explicit costs of an item include all those things that must be forgone to acquire that item. True False

False The opportunity costs of an item refers to all those things that must be forgone to acquire that item. Opportunity costs include explicit costs and implicit costs.

A firm in a competitive market can change the market price by changing its own production level. True False

False, In a competitive market firms are price takers. Production decisions by an individual firm will not affect the market price.

ATC

TC/Q

AVC

VC/Q

Input costs that require an outlay of money by the firm are called _______ costs while input costs that do not require an outlay of money by the firm are called _______ costs.

explicit; implicit