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What are total cost of production examples?
In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market Total Market Cost =Variable Costs and fixed costs ...Fixed costs plus variable costs.
Who own the factor of production?
Business firms own the factors of production.
Why do firms want to know their average total cost?
Average total cost determines how much profit or loss a firm will make at a certain output and price. It also determines is a firm should shut down, temporarily stopping production (not covering variable costs) but keeping the business (covering fixed costs), or if it should exit the market (not covering variable or fixed costs).
What will happen to profits and output levels when variable costs rise in a perfectly competitive industry?
When variable costs rise in a perfectly competitive industry, profits will decrease and output levels may decrease as well. This is because higher variable costs reduce the profit margins for firms, leading to lower overall profits. In response, firms may reduce their output levels to maintain profitability.
The government must go to business firms to buy resources for production.?
false A+ users ^^
What are total cost of production examples?
In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market Total Market Cost =Variable Costs and fixed costs ...Fixed costs plus variable costs.
Who own the factor of production?
Business firms own the factors of production.
Why do firms want to know their average total cost?
Average total cost determines how much profit or loss a firm will make at a certain output and price. It also determines is a firm should shut down, temporarily stopping production (not covering variable costs) but keeping the business (covering fixed costs), or if it should exit the market (not covering variable or fixed costs).
What are examples of total costs?
In a perfectly competitive market, all n firms are equal. Thus, the market total cost is the total cost (TC) of one firm multiplied by the amount of n firms in the market Total Market Cost =Variable Costs and fixed costs ...Fixed costs plus variable costs.
What will happen to profits and output levels when variable costs rise in a perfectly competitive industry?
When variable costs rise in a perfectly competitive industry, profits will decrease and output levels may decrease as well. This is because higher variable costs reduce the profit margins for firms, leading to lower overall profits. In response, firms may reduce their output levels to maintain profitability.
How is CVP impacted by changes in fixed and variable costs?
A change in variable cost affects the contribution margin ratio. A change in fixed cost affects the break-even point . An increase in these costs affect the firms profit.
Firms with a high degree of operating leverage are?
Have a high amount of fixed costs relative to their variable costs. DOL= CM / Net Income We derive CM by the eqaution of Selling Price - Variable Costs If a firm has high variable costs relative to their selling price then they will have a small CM and therefore their DOL will decrease. Have a high amount of fixed costs relative to their variable costs. DOL= CM / Net Income We derive CM by the eqaution of Selling Price - Variable Costs If a firm has high variable costs relative to their selling price then they will have a small CM and therefore their DOL will decrease.
The government must go to business firms to buy resources for production.?
false A+ users ^^
If variable labor costs decline other things are held constant how will this effect a firms breakeven point?
breakeven point will decrease
How is a perfectly competitive firms marginal cost curve related to its supply curve?
a perfectly competitive firms supply curve will be the portion of the marginal cost curve which lies above the average variable cost curve (AVC)..this will be due to the firms unwillingness to supply below the price in which they could cover their variable costs
Why is it important for business firms to have integrated approach to the management of their activities?
to maximise efficiencies.Efficiencies have direct impact on Costs.
What are the factors influencing cost behavior in a firm?
Cost behavior in a firm is influenced by several factors, including the nature of the costs (fixed, variable, or semi-variable), the level of production or sales volume, and operational efficiency. External factors such as market conditions, supplier pricing, and competition also play a significant role. Additionally, managerial decisions regarding resource allocation and cost control strategies can impact how costs behave as business conditions change. Understanding these factors helps firms plan and manage their budgets effectively.
