Microeconomics Chapter 8
Terms
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- In what kind of competition do firms have no control over price?
- Perfect competition
- In maximizing profit, firms can choose how much _ to supply and attempt to minimize _
- output costs
- What two conditions define the short run?
- Firms have some fixed factor of production? Firms cannot enter or exit the industry.
- What is any cost that does not depend on the firm's level of output. Incurred even if the firm is producing nothing
- Fixed costs (FC)
- A cost that depends on the level of production
- Variable Cost (VC)
- Fixed costs plus variable costs
- Total Cost (TC)
- The total of all costs that do not change with output, even if output is zero
- Total fixed costs (TFC)/ Overhead
- Total fixed costs divided by the number of units of output; a per-unit measure of fixed costs
- average fixed costs
- Another name for fixed costs in the short run b/c firms have no choice but to pay them
- sunk costs
- The process of dividing total fixed costs by more units of output. Average fixed cost declines as quantity rises
- Spreading overhead
- What do the graphs of Total fixed costs and Average fixed costs look like?
- Page 6 chapter 8
- the total of all costs that vary with output in the short run. These are zero when output is zero and vary as output varies
- Total variable Cost
- Total variable cost divided by the number of units of output
- Average variable cost
- The increase in total cost that results from producing one more unit of output. Marginal costs reflect changes in variable.
- Marginal Cost
- What do the graphs of Total Variable Costs and Marginal Costs look like?
- page 14 chapter 8
- Average fixed cost = ?
- Average Variable Cost + Average fixed cost