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What is the difference between average total costs and average variable costs?
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
What is cost What is the difference between total cost and average cost?
Average total cost is the average of all your costs. This is your Fixed Costs and your Variable costs. Average Variable Cost is the average of your costs that can fluctuate.
What is the meaning of shutdown point?
The shutdown point is the output level at which total revenue is equal to the total variable cost. Here the product price is also equal to its average variable cost.
What is the formula to find the average variable cost?
Average Variable Cost = Total Variable Cost/ Quantity Average Cost = Average Fixed Cost + Average Variable Cost Average Cost = Total Cost/Quantity
Is selling price and total variable cost the same?
Selling price = Total Cost (Total Variable cost + Total fixed cost) + profit margin
When price exceeds average variable cost but not average total cost the firm should in the short run?
Minimize total losses by producing at the rate of output where ATC is minimized.
What effect will an increase in output have on average fixed average variable and average total cost?
average fixed will go down, average variable will remain the same, and average total will go down.
What is the average price of Raleigh NC Homes?
It would seem that the average price per square foot for homes in Raleigh is $115. The average total price for a house there is between $175,000 and $239,391.
Why would a perfectly competitive firm shutdown in the short-run if prices is lower than average variable cost but will continue to produce if price is below average total cost but above variable cost?
A perfectly competitive firm will shut down in the short run if the price falls below the average variable cost (AVC) because it cannot cover its variable costs, leading to greater losses than if it ceased production altogether. However, if the price is below average total cost (ATC) but above AVC, the firm can still cover its variable costs and contribute something toward fixed costs, making it more beneficial to continue production in the short run to minimize losses. Thus, the shutdown decision is based on the firm’s ability to cover variable costs rather than total costs.
Can you explain the shut-down rule in perfect competition?
Shut-down point is when Price equals Minimum Average Variable Cost. At this point the firm is indifferent between producing or shutting down. This is because at the point Total Revenue is equal to Total Variable Cost, so by producing or shutting down, the firm is making a Loss equal to Total Fixed Costs no matter what it chooses to do
Can you explain the shut down rule in perfect competition?
Shut-down point is when Price equals Minimum Average Variable Cost. At this point the firm is indifferent between producing or shutting down. This is because at the point Total Revenue is equal to Total Variable Cost, so by producing or shutting down, the firm is making a Loss equal to Total Fixed Costs no matter what it chooses to do
What is Total variable costs?
Total variable costs are the sum of expenses which change proportionally as the price of services and goods fluctuate. The total marginal costs above produced units is also referred to as total variable costs.
