Chapter 10 Flashcards
1
Q
To predict a firm’s behaviour
A
- know a firm’s goal
- know constraints they face
2
Q
Opportunity cost
A
The value of the next best alternative forgone
3
Q
Forgone interest
A
The interest income that is not earned or received as a result of choosing one alternative
4
Q
What is economic profit?
A
Firm’s total revenue - Total opportunity cost of production
5
Q
The price ceiling _______ the maximum price that someone is willing to pay for the last tonne of fertilizer available on an illicit market.
A
increases
6
Q
Average fixed cost, average variable cost, average total cost relationship on graph:
A
Average fixed cost - Has to be the only line that heads downwards
average variable cost - U shape
average total cost - Has to be the highest line on graph
7
Q
A
