MC: The Firms And Market Structures Flashcards
(17 cards)
Marginal cost is calculated by dividing total variable cost by output?
False.
That’s AVC. Marginal cost is the change in total cost divided by the change in quantity.
Marginal costs intersects average variable cost at its minimum point?
True
When MC <AVC, AVC falls.
When MC> AVC, AVC rises.
AVC can be higher than MC when AVC is decreasing?
False.
What does Average Variable Cost measure?
A. The total cost of all resources
B. The average fixed cost per unit
C. The average variable cost per unit
C
If the Marginal Cost is below the Average Variable Cost, what happens to AVC?
A. AVC increases
B. AVC decreases
C. AVC stays constant
B
Which of the following best describes Marginal Cost?
A. Cost of producing one additional unit
B. Total cost divided by total output
C. Fixed cost plus variable cost
A
When MC is greater than AVC, what does this imply?
A. AVC is increasing
B. AVC is decreasing
C. AVC is at its minimum
A
The formula for Average Variable cost is _______.
TVC / Quantity
For perfect competition, MC intercepts AVC at its _______ point.
Minimum
True or False: Economic profit is when Price is less than min ATC?
False. It’s when price is greater than ATC.
What is the formula for average total cost?
TC / Quantity sold
Normal profit is when price is _______ to min ATC.
Equal
Contribution in relation to income are________.
Dollars left over after covering variable cost. Typically to cover fixed.
A perfectly elastic demand curve environment can be described as __________.
Consumers being sensitive to price.
Price takers typically- no influence on market price.
Demand curve is horizontal.
A perfectly inelastic demand curve environment can be described as __________.
Consumers not responding poorly to price hikes. Demand curve is vertical.
True or False: Imperfect competition is also known as a monopoly?
False.
It’s the monopolistic competition.
What direction does the demand curve slope for imperfect competition?
Downward sloping demand.
