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When costs that vary with the level of output are divided by the output you have calculated?
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What are a business firm's fixed and variable costs of production?
Fixed costs are costs that do not vary with the level of output, such as rent and insurance premiums. Variable costs are costs that change with the level of output, such as wages and raw materials.
What is the definition of variable costs?
Change depending on the level of output
If you have Marginal Cost and Marginal Damages how do you find the optimal level of output?
The optimal level of output is where marginal costs = marginal damages.
What happens to the value of average fixed cost as the level of output increases?
The average fixed cost is equal to fixed cost divided by level of output, if the output increases; the average fixed cost is less.
What categories of costs combine to create a firm's total cost?
A firm adds its fixed costs and capable costs to determine its todal cost at each level of output.
What are a business firm's fixed and variable costs of production?
Fixed costs are costs that do not vary with the level of output, such as rent and insurance premiums. Variable costs are costs that change with the level of output, such as wages and raw materials.
What is the definition of variable costs?
Change depending on the level of output
If you have Marginal Cost and Marginal Damages how do you find the optimal level of output?
The optimal level of output is where marginal costs = marginal damages.
Costs that are unaffected by the quantity of product sold are costs.?
Those are Fixed Cost - costs which must be paid for any output level (sunk costs)
What happens to the value of average fixed cost as the level of output increases?
The average fixed cost is equal to fixed cost divided by level of output, if the output increases; the average fixed cost is less.
What categories of costs combine to create a firm's total cost?
A firm adds its fixed costs and capable costs to determine its todal cost at each level of output.
When a perfectly competitive firm is at its profit maximizing level of output you can say that it is?
is producing where price exceeds marginal costs
Why would a tractor firm shut down some plants rather than keep all of its plants running at reduced output levels?
If you reduce output level you will reduce some costs (materials, power usage, etc.) but there are still many types of costs that remain at the same level. So, when you reduce output, your products will have a higher unit cost of production. And they will be less competitive.
What is cost profit volume analysis?
profit(CVP)analysis examines the behavior of total revenues, total costs, and operating income as changes occur in the output level, selling price, variable costs per unit, and /or fixed costs of a product.
How can marginal revenew and marginal costs help set the most profitable putput level?
The most profitable output level is when marginal costs equals marginal revenue. When marginal revenue is larger than marginal cost, that means that more product can be produced for more profit.
Do fixed and variable costs affect short-run marginal cost?
Fixed costs do not affect short-run marginal cost because they are just that- fixed. They are not dependent on quantity when it changes and does not vary directly with the level of output. Variable costs, however, do affect short-run marginal costs.
What is the name for the level of crop output from a given level of input?
Productivity
