Chapter 18 Flashcards

1
Q

Fixed costs

A

Costs that do not vary with the number of items produced (in the short run).

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2
Q

Variable costs

A

Costs that vary directly with the number of items sold or produced.

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3
Q

Total costs

A

Fixed costs plus variable costs.

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4
Q

Average costs

A

Total costs divided by number of units sold/produced; also called cost per unit.

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5
Q

Economies of scale

A

Factors that lead to a reduction in average costs as a business increases in size.

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6
Q

Diseconomies of scale

A

Factors that lead to an increase in average costs as a business increases in size,

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7
Q

Break-even output

A

The quantity that must be sold for total costs to equal total revenue.

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8
Q

Break-even chart

A

Graphs that show how costs and revenue of a product change at different
output levels - showing the B-E point

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9
Q

Contribution

A

Selling price minus variable cost per unit

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