BUSINESS ECONOMICS – Questions With Expert
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Practice questions for this set
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when a supply curve shifts to the right, the price of a product lowers
which lowers the average revenue received by a firm. In this case the
AR=MC curve shifts downwards. Now the average cost curve is
always higher than the average revenue curve, meaning that loss is
made. Even now the best profit a firm can make is at the point where
MC=MR. The loss is the square drawn from this point straight to
where it meets AC, to the vertical axis and to P. In this situation some
firms would leave the industry, supply curve would shift to the left
and industry would be back in equilibrium.
Choose an answer
a decrease in average revenue in
1 2 oligopoly
perfect competition
3 AC and TC curves 4 fixed cost
Don't know?
Terms in this set (104)
, a market structure in which a few large firms dominate a
oligopoly
market
total cost total costs of producing a particular output
average cost total cost / quantity of output
the additional cost of producing one extra unit of
marginal cost
output
fixed cost a cost that does not vary with output
variable cost a cost that varies with output
average fixed cost total fixed cost / quantity of output
average variable cost total variable cost / quantity of output
- rent
- interest on borrowed money
examples of fixed costs (5) - some salaries
- advertising
- research and development
- raw materials
examples of variable costs - electricity
(4) - most salaries
- fuel
average fixed cost curve
the marginal cost curve goes
through the vertex of the average
MC and AC curves
cost curve
start in the same place but total cost is higher than the
AC and TC curves
average cost from that point on wards
Factors that cause a producer's average cost per unit to
Economies of scale
fall as output rises
Solutions
Save
Practice questions for this set
Learn 1/6 Study with Learn
when a supply curve shifts to the right, the price of a product lowers
which lowers the average revenue received by a firm. In this case the
AR=MC curve shifts downwards. Now the average cost curve is
always higher than the average revenue curve, meaning that loss is
made. Even now the best profit a firm can make is at the point where
MC=MR. The loss is the square drawn from this point straight to
where it meets AC, to the vertical axis and to P. In this situation some
firms would leave the industry, supply curve would shift to the left
and industry would be back in equilibrium.
Choose an answer
a decrease in average revenue in
1 2 oligopoly
perfect competition
3 AC and TC curves 4 fixed cost
Don't know?
Terms in this set (104)
, a market structure in which a few large firms dominate a
oligopoly
market
total cost total costs of producing a particular output
average cost total cost / quantity of output
the additional cost of producing one extra unit of
marginal cost
output
fixed cost a cost that does not vary with output
variable cost a cost that varies with output
average fixed cost total fixed cost / quantity of output
average variable cost total variable cost / quantity of output
- rent
- interest on borrowed money
examples of fixed costs (5) - some salaries
- advertising
- research and development
- raw materials
examples of variable costs - electricity
(4) - most salaries
- fuel
average fixed cost curve
the marginal cost curve goes
through the vertex of the average
MC and AC curves
cost curve
start in the same place but total cost is higher than the
AC and TC curves
average cost from that point on wards
Factors that cause a producer's average cost per unit to
Economies of scale
fall as output rises
