Short Run Costs 7.3-8 ~ Benjamin Rainwater

Question 1

The short run is

Answer 1

a brief period of time during which only one input can be varied.

Question 2

Fixed inputs are

Answer 2

inputs in the production process that do not change with changes in output. Examples are machinery and factories.

Question 3

Variable inputs are

Answer 3

inputs that can be changed when output changes. Usually labor is the only variable input.

Question 4

Total fixed costs (FC) are

Answer 4

short-run costs that that do not vary with output.

Question 5

Average fixed costs (AFC) are

Answer 5

fixed costs divided by total output.

Question 6

Average variable costs (AVC) are

Answer 6

variable costs divided by total output.

Question 7

Average total costs (ATC) are

Answer 7

the summation of AFC and AVC.

Question 8

average

fixed costs decrease as total product (TP)…

Answer 8

increases

Question 9

To graph average total costs (ATC), you

must get the vertical summation of

Answer 9

AFC and

AVC.

Question 10

The ATC curve will always be lower/higher than the AVC curve?

Answer 10

Higher

Question 11

The ATC curve is always lower/higher than the AFC curve?

Answer 11

Higher

Question 12

ATC curve is what shaped?

Answer 12

U shaped.