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ECON 2310 Chapter Notes - Chapter 8: Marginal Cost, Isocost, Tangent

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mauvecaribou445
5 Dec 2013
School
University of Guelph
Department
Economics
Course
ECON 2310
Professor
B Ferguson

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Document Summary

Total cost- a firm"s total cost of producing a given level of output is the expenditure required to produce that output in the most economical way possible. Variable costs- the costs of inputs that vary with the firm"s output level. Fixed costs- the costs of inputs whose use does not vary as the firm"s level of output changes, with the possible exception that the cost might not be incurred if the firm decides to produce nothing. Avoidable- a fixed cost is avoidable if it is not incurred when the firm decides to produce no output. Sunk- a fixed cost is sunk if it is incurred even when the firm decides not to operate. Opportunity cost- the cost associated with forgoing the opportunity to employ a resource in its best alternative use. Isocost line- contains all the input combinations with the same cost.

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Related Questions

constant costs

increasing returns to scale

constant returns to scale

isocost curve

decreasing returns to scale

isoquant

diseconomies of scale

long-run average cost

economies of scale

long-run marginal cost

economies of scope

marginal rate of technical substitution

expansion path

short-run expansion path

___A curve that displays all the various combinations of inputs that will produce a given amount of output.

___The rate at which one input is substituted for another along an isoquant.

___Line that shows all the possible combinations of inputs that can be purchased for a given total cost.

___A curve showing all of the cost-minimizing levels of input usage for various levels of output.

___When the usage of all inputs is increased by an equal proportionate amount, output ___increases by exactly the same proportion.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a larger proportionate amount.

___When the usage of all inputs is increased by an equal proportionate amount, output increases by a smaller proportionate amount.

___Cost per unit in the long run.

___The change in long-run total cost per unit change in output.

___When long-run average cost falls as output increases.

___When long-run average cost increases with increases in output.

___Long-run average and marginal costs are equal for all levels of output.

___The situation in which the joint cost of producing two goods is less than the sum of the separate costs of producing the two goods.

___Horizontal line showing the cost-minimizing input combinations for various output levels when capital is fixed in the short run.

1. A firm's total cost of producing 50 units of output is $1,000. At this output level, average fixed costs are equal to $10. It follows that the firm's average variable costs are equal to _____.

2. To maximize profits, a price-taking (i.e., competitive) firm should produce its output up to the level where

a. the market price of the firm's product is equal to its total variable cost.

b. the market price of the firm's product is equal to its s total cost.

c. the market price of the firm's product is equal to its marginal cost.

d. marginal cost is equal to average cost.

e. none of the above.

3. To minimize losses, a competitive firm should shut down if the price is less than

a. average cost.

b. average variable cost.

c. total cost.

d. marginal cost.

e. average total fixed cost

  1. A firm that has total fixed costs of $20,000 sells its output for $150 per unit and has an average variable cost of $200. If the firm's cost and revenue curves are linear, how much output must the firm produce to break even?

    500

    400

    300

    The firm cannot break even.

please show how you come up with the answer , do not just guess !!!