Flashcards in Short-Run Costs 7.3-2- Marie Smith Deck (12)
What will the variable cost curve tell us?
how much $ you have to spend on labor in order to produce a given quantity of output.
On a two dimensional graph, variable cost will be shown on which axis?
Variable cost is on the vertical axis.
What will be on the horizontal axis of a graph depicting the variable cost curve?
Output ( T P ) is shown on the horizontal axis
What is the point of inefficiency?
It is the point where you can produce the same amount of output with less $ spent on labor.
What does the point of inefficiency look like on the graph?
It is the point wher the variable cost curve begins to move backward.
Are inefficient points included or excluded on a graph showing the variable cost curve?
They are excluded.
What happens to cost when productivity goes up?
Cost goes down.
What happens to productivity when cost rises?
Productivity goes down.
What kind of relationship is there between productivity and cost?
They are inversely related.
At what point does the variable cost cuvr go vertical?
At the maximum point.
What defines the maximum point?
This is the point at which no matter how much $ you spend on labor, you will not increase the output.