23245604
Descrição
FlashCards por Sophia Lynch, atualizado more than 1 year ago
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Criado por Sophia Lynch
aproximadamente 4 anos atrás
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| Questão | Responda |
| What is a 'Fixed Cost'? | A cost that does not vary with the quantity of output produced. |
| What is a 'Variable Cost'? | Cost that varies with the quantity of output produced. |
| Total Cost (TC) = | Fixed Cost (TFC) + Variable Cost (TVC) |
| How much is FC? | 100 |
| What does the 'Marginal Cost' (MC) do? | Measures the increase in total cost that arises from an extra unit of production. How much does it cost to produce one additional unit of output? |
| What is the formula for marginal cost? | |
| What will happen to the 'Average Fixed Cost' (AFC) in the long run? | It will always decline. For e.g. if FC = 100, then 100/1 = 100, 100/2 = 50 and so on... |
| What will happen the the 'Average Variable Cost' (AVC) in the long run? | It will always decline. For e.g. 4/1 = 4, 16/2 = 8, 36/3 = 12 and so on... |
| How is the 'Average Cost' (AC) calculated? | TC/Number of Output For e.g. 100/1, 104/2 and so on... |
| What makes up 'Average Total Cost' (ATC)? | Average Fixed Cost (AFC) + Average Variable Cost (AVC) |
| Where MUST the Marginal Cost Curve intersect the Average Total Cost Curve? | At it's lowest point. |
| When does the 'Law of Diminishing Marginal Returns' start to happen on the MC curve? | From the lowest point onwards. |
| The marginal cost curve eventually rises with the... | quantity of output. |
| The Average Total Cost (ATC) Curve is... | U-shaped. |
| Marginal Cost (MC) crosses both ATC and AVC at their... | minimum's. |
| What is happening to the average cost in each scenario? | @ 3 Q = Economies of Scale @ 2 Q = Constant Returns to Scale @ 1(1/2) Q = Diseconomies of Scale |
| What happens in 'Economies of Scale'? | The long-run average total cost (ATC) falls as the quantity of output increases. |
| What happens in 'Constant Returns to Scale'? | Long-run average total cost (ATC) stays the same as the quantity of output changes. |
| What happens in 'Diseconomies of Scale'? | Long-run average total cost (ATC) rises as the quantity of output increases. |
| What are the features of a competitive market? | 1. There are many buyers and sellers 2. The goods are largely the same 3. There is perfect competition 4. Both sellers and buyers are 'price takers' (They have no influence over price) 4. Low barriers to entry |
| For competitive firms, average revenue and marginal revenue should equal...? | Price. AR = MR = P |
| In both a monopoly and competitive markets, to maximise profit... | MC must be = to or less than MR |
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