In the short term a firm will produce provided the revenue.
Covers fixed costs
Covers variable costs
Covers total costs
Covers sales
Average fixed cost
Never becomes zero
Curve never touches x axis
Curve never touches y axis
All the above
Which one of the following statement is true ?
If the marginal cost is greater than the average cost the average cost falls .
If the marginal cost is greater than the average cost the average cost increases.
If the marginal cost is positive total costs are maximised.
If the marginal cost is negative total costs increase at a decreasing rate if output increases.
In the long term a firm will produce the revenue covers
Fixed costs
Variable costs .
Total costs
Sales
If firms earn normal profits.
They will aim to leave the industry
Other firms will join the industry
The total revenue equals total costs
No profits is made in accounting terms
Economic profit is the difference between total revenue and
Average cost
Marginal cost
Economic cost
Total cost .
_______ cannot be changed in the short period.
Fixed cost
Production cost
Total cost
Variable cost
The average variable cost curve .
Is derived from the average fixed costs .
Converges with the average cost as output increases .
Equals the total costs divided by the output .
Equals revenue minus profits .
It total revenue is divided by the units sold , we shall get
Total revenue
Average revenue
Marginal revenue
Total profit
If the marginal revenue is less than the marginal cost then to profit maximize a firm should
Reduce output
Increase output
Leave output where it is
Increase costs
