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Is the cost of producing one more unit of output are fixed cost?
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What causes average fixed cost to decline?
The average fixed cost curve is negatively sloped. Average fixed cost is relatively high at small quantities of output, then declines as production increases. The more production increases, the more average fixed cost declines. The reason behind this perpetual decline is that a given FIXED cost is spread over an increasingly larger quantity of output.
What is a business firm's marginal cost?
Marginal cost, which is the cost of producing one more unit of output, helps determine the level at which profits will be maximized.
What term describes the cost of producing one more unit of output?
Where production is already under way, the term "marginal" is applied to the cost of additional products.
What is increases productivity lead to?
It means an increase in the ability to produce more at a quicker rate.
Is the increase in efficiency gained by producing more output without using more inputs.?
savings
What causes average fixed cost to decline?
The average fixed cost curve is negatively sloped. Average fixed cost is relatively high at small quantities of output, then declines as production increases. The more production increases, the more average fixed cost declines. The reason behind this perpetual decline is that a given FIXED cost is spread over an increasingly larger quantity of output.
What is a business firm's marginal cost?
Marginal cost, which is the cost of producing one more unit of output, helps determine the level at which profits will be maximized.
What term describes the cost of producing one more unit of output?
Where production is already under way, the term "marginal" is applied to the cost of additional products.
While producing less then the competitive output decreases social welfare. Can it be said about producing more than the competitive output?
Yes
Relationship between fixed cost average cost and marginal cost with graph?
Fixed costs do not change with production level, so they are represented by a horizontal line on a graph. Average cost decreases as production increases due to spreading fixed costs over more units, then increases as marginal cost (the cost of producing one more unit) exceeds average cost. Marginal cost intersects average cost at its minimum point, where average cost is at its lowest.
What is increases productivity lead to?
It means an increase in the ability to produce more at a quicker rate.
What is meant by marginal cost?
Marginal product is the result of an additional output of production. An example is adding an hour to an employeeâ??s work schedule to produce 100 more cookies. Marginal cost is the cost associated with producing an additional output. An example is paying an employee the overtime rate per hour for producing 100 more cookies.
Is the increase in efficiency gained by producing more output without using more inputs.?
savings
Is the increase in efficiency gained by producing more output without using more inputs?
savings
DO Average cost always falls as output increases because fixed costs will be spread more thinly?
Not necessarily. Total Cost = Fixed Cost + Variable Cost; Variable Cost=f(Quantity) and if f`(Quantity)>0 it implies that as quantity produced rises variable cost would rise. Average Total Cost=Average Fixed Cost + Average Variable Cost. If initially the Total Cost function is more of an odd function (mostly it is) then the Average Cost will look more like a parabola i.e. it will tend to fall becuase the Fixed Cost gets thin but later that is overtaken by the increase in Variable Cost. But there are cases when Average Total Cost does fall continuously as quantity increases and these involve huge Fixed Costs like say Electric Supply Infrastructure. This is called natural monopoly.
Distinguish between fixed cost and variable cost?
A fixed cost is a cost (in the short-run) that does not change based on the production output in a business; i.e. no matter how many products a company makes/sells, these costs do not change. Examples include rent, salaries, and insurance. A variable cost is a cost (in the short-run) that changes based on the amount of output in a business; i.e. the cost increases if the company makes/sells more products, and vice-versa. Examples include wages, cost of goods sold, and income tax. Under classical economic theory, all costs are variable in the long-run.
What is marginal cost?
This costing system categorizes cost according to their cost behavior and divides them into variable and fixed cost, this system uses a cost for each unit of output based purely on the variable cost. All fixed cost is regarded as times based and are therefore linked to accounting periods rather than units of output. This costing system categorizes cost according to their cost behavior and divides them into variable and fixed cost, this system uses a cost for each unit of output based purely on the variable cost. All fixed cost is regarded as times based and are therefore linked to accounting periods rather than units of output.
