18 Questions
Where does AVC reach its minimum?
At point Q
What happens to SAC to the left of q2?
SAC is falling
Where does the SMC curve intersect the SAC curve in Figure 3.8?
Point S
In the long run, what happens to fixed costs?
Fixed costs remain the same
What does LRAC represent?
Total cost per unit of output
When is AVC greater than SMC?
To the right of q1
What is the relationship between SAC and AVC initially as output increases?
SAC falls as AVC rises
At what point does the rise in AVC become larger than the fall in AFC according to the text?
After a certain level of production
Where does the minimum point of SAC curve lie compared to the minimum point of AVC curve?
To the right
When does SMC become greater than SAC according to the text?
When SAC is rising
What is the shape of the SAC curve described in the text?
'U'-shaped
What does the SMC curve do to the SAC curve at the minimum point of SAC?
Cuts from below
What is the formula for Average Fixed Cost (AFC)?
AFC = TFC / q
At what level of output is the Short Run Average Cost (SAC) equal to the Average Variable Cost (AVC)?
Output level 5
What does the Short Run Marginal Cost (SMC) represent?
The increase in Total Variable Cost (TVC)
How is Total Variable Cost (TVC) calculated?
TVC = TVC - AFC
Which cost curve represents the sum of Total Fixed Cost (TFC) and Total Variable Cost (TVC)?
Total Cost (TC)
What does Marginal Cost represent in the short run?
The increase in Total Variable Cost (TVC) due to one more unit of output
Learn how to calculate Average Variable Cost (AVC) and Total Variable Cost (TVC) using geometric principles. Understand the relationship between output, AVC, and TVC at a specific level of production.
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