(7.3-6; 7.3-7; 7.3-8; 7.3-9; 7.3-10)-A. Smith Flashcards
A guide for how much to produce is?
marginal cost
The cost of labor per unit of output produced
is ___________.
average cost
What does AVC stand for?
average cost variable
AVC = ?
VC(total variable cost) / TP (total output)
Does marginal cost and average variable cost
the same concept?
no
What two things are substantial in finding the
average variable cost?
total variable cost and total output
Do we, as economists, multiply or divide
variable cost and total product to get the average variable cost?
divide
What is AVC good for?
to see if one would make a profit or not
Does AVC vary when we change amount of
output?
yes
When does AVC change?
When the productivity changes
Productivity and cost are ________ related.
inversely
As price increases, cost _________.
decreases
Marginals and averages always have the
same relationships. True or False
True
When marginal increases, average ________.
increases
When marginal decreases, average
__________.
decreases
What is the slope of the variable cost curve.
Marginal cost
The AVC curve is at a __________ when it intersects with the MC curve.
minimum
When MC is above AVC, it pulls the
average ________
up
When MC is below AVC, it pulls the average
__________
down
Minimum slope = __________ AVC
minimum
Marginal cost is _________ related to
marginal product.
inversely
AVC is ________ related to average product.
inversely
What is the definition of slop?
rise over run
the curves of MC and AVC are ________
_______ to the curves of MP and AP.
mirror images
What is on the x-axis on the MC and AVC graph?
TP (output)
Define Short run:
brief period of time that is so short that at
least one input is fixed
Fixed input costs that are constant
fixed cost
The more sets you _______, the more thinly
you can spread your fixed costs out
produce
The more you produce, the more your fixed
costs _______
shrinks
What is AFC?
average fixed cost
Fixed cost per unit of output produced
Average fixed cost
What two things deal with average fixed cost?
total fixed cost and total output
As TP increases, AFC ________.
decreases
AFC + AVC = ?
ATC
What is ATC?
Average total cost of production
We us _________ addition to get ATC.
vertical
Average total cost =
total cost / quantity produced
ATC is the sum of what two things?
variable cost and fixed cost
What is the equation of ATC?
ATC = TC / TP
is there a distinct number of methods to
calculate ATC?
yes
If so, how many methods?
2
Define average total cost.
the total cost of production divided by the
number of units produced
What is VC / TP?
AVC
What is FC / TP?
AFC
ATC = ? + ?
AVC ; AFC
Is average fixed cost impotant to determining the average cost?
yes
What are the formulas for the two methods
to calculate ATC?
ATC= TC / TP ATC= AVC + AFC
You have to determine total cost before
getting the average total cost.
True
The concept of ATC is not important to
economists.
False
How many variable costs are there in
microeconomics?
3
How many fixed costs are there?
1
Name the three variable costs
variable
marginal
average
Define AVC (average variable cost):
cost of labor per unit of output produced
Define AFC (average fixed cost)
fixed cost per unit of output produced
In the ATC curve, costs fall because of what
two things:
increase in output
rises in productivity
In the ATC curve, costs rise because of what?
decrease in productivity
AFC shrinks as output _________
increases
Define marginal cost:
cost of producing an extra unit of output
Remember:
ATC = AFC + AVC
Marginal cost curve cuts through the AVC
curve at the __________ point.
minimum
Which one of the three would maximize profit for a firm?
- MC
- AFC
- AVC
none of them would help maximize a profit
