Chapter 10 - Costs

Question 1

Fixed Costs

Answer 1

Costs that do not vary with the level of output in the short run

(Aka Overhead costs)

Question 2

Variable cost

Answer 2

Total cost of the variable factor of production at each level of output

Question 3

Total cost

Answer 3

The total of fixed and variable costs

Question 4

Average fixed cost

Answer 4

Fixed cost divided by the quantity of output

Question 5

Average variable cost

Answer 5

Variable cost divided by the quantity of output

Question 6

Average total cost

Answer 6

Total cost divided by the quantity of output

Question 7

Marginal cost

Answer 7

The change in total cost that results from producing an additional unit of output

Question 8

Isocost

Answer 8

A set of all input bundles each of which costs the same amount

Question 9

Output Expansion path

Answer 9

The locus of tangencies traced out by an isocost line of given slope as it shifts outwards into the isobutane map of a production process

Question 10

Natural monopoly

Answer 10

An industry whose market output is produced at the lowest cost when production is concentrated in the hands of a single firm

Question 11

Minimum efficient scale

Answer 11

The level of production required for LAC to reach its minimum level