Short-Run Costs 7.3-10 Hunter Parrott

Question 1

The average cost curves summarize unit costs and ___________.

Answer 1

PRODUCTIVITY

Question 2

The _____ curves are mirror images of the productivity curves.

Answer 2

Costs

Question 3

The important average cost curves are ___, ___, and ___.

Answer 3

AFC, AVC, ATC

Question 4

Each of these is calculated by dividing the appropriate cost by _____ ____

Answer 4

Total Product

Question 5

AFC=

Answer 5

FC/TP

Question 6

AVC=

Answer 6

VC/TP

Question 7

ATC=

Answer 7

(VC+FC)/TP

Question 8

In the decreasing portion of the average cost curves on the left, costs fall because

Answer 8

1. increasing output is spreading the fixed costs over more units; thus, average fixed—and therefore average total—costs are falling;
2. additional workers are increasingly productive.

Question 9

In the _________ portion of the total cost curves on then left, costs are increasing because additional workers are less productive than the previous ones.

Answer 9

increasing

Question 10

Even though fixed costs (FC) remain the same, the ______ ___ are increasing at an increasing rate

Answer 10

Variable costs

Question 11

The vertical difference between the ATC curve and the AVC curve is the area between the two curves. This area is?

Answer 11

AFC

Question 12

as production _________, the AFC shrinks

Answer 12

increases

Question 13

In the rising portion of the ATC curve, AVC is increasing faster than AFC is falling, thus pushing the ATC curve (up, down).

Answer 13

up

Question 14

When AVC and ATC are falling, MC must be _____ the average cost curves

Answer 14

below

Question 15

MC intersects the average cost curves at the average cost curves’ _______ points

Answer 15

minimum