AGR563 CHAPTER 3

What does Total Fixed Cost (TFC) represent in cost accounting?

• The sum of variable costs

• The sum of all fixed costs

• Average fixed cost

• Marginal cost

Which of the following is an example of a fixed cost?

• Raw materials

• Wages

• Property taxes

• Fuel costs

In the short run, which of these costs must be paid regardless of production level?

• Variable costs

• Fixed costs

• Marginal costs

• Average total costs

How is Marginal Cost (MC) calculated?

• ΔTVC / ΔOutput

• ΔTC / ΔOutput

• TVC/Output

• TC/Output

What shape is typical for the Average Total Cost (ATC) curve?

• L-shaped

• U-shaped

• Straight line

• Inverted U-shape

Which cost curve approaches the Average Variable Cost (AVC) curve from above?

• Marginal Cost

• Average Fixed Cost

• Average Total Cost

• Total Cost

What does it mean when MR = MC in production?

• Production is at a loss

• Maximum profit is achieved

• Fixed costs are minimized

• Output is decreasing

If Price < AVC in the short run, what should the firm do?

• Produce to minimize losses

• Stop production

• Increase production

• Lower fixed costs

In the long run, if Price < ATC, what should the firm do?

• Continue production

• Stop production and sell fixed assets

• Produce to minimize losses

• Increase prices

What is the 'opportunity cost' in economic terms?

• The monetary payment to resource suppliers

• The cost of the best alternative use of resources

• The total revenue minus explicit costs

• Variable costs only