The vertical distance between a firm's average total cost curve, ATC, and its average variable...
Question:
The vertical distance between a firm's average total cost curve, ATC, and its average variable cost curve, AVC,
A. is equal to its average product.
B. is equal to its marginal cost, MC.
C. decreases as output increases.
D. is equal to its total fixed cost, TFC.
Average Fixed Cost:
Mathematically, the Average Fixed Cost is the ratio of the total fixed cost of the product and the total quantity produced by the firm. In other words, it is known as a fixed cost per unit of output.
Answer and Explanation: 1
Become a Study.com member to unlock this answer! Create your account
View this answer- The correct option is C. Decreases as output increases.
We know that
AFC = ATC - AVC where AFC = Average fixed cost, ATC = Average total cost and AVC...
See full answer below.
Ask a question
Our experts can answer your tough homework and study questions.
Ask a question Ask a questionSearch Answers
Learn more about this topic:
Get access to this video and our entire Q&A library
Fixed Costs: Definition, Formula & Examples
from
Chapter 3 / Lesson 14
215K
What is a fixed cost? Learn the fixed cost definition and how to calculate it using the fixed cost formula. Compare fixed vs. variable costs and see fixed costs examples in business.
Related to this Question
- The vertical distance between a firm's total cost (TC) and its total variable cost (TVC) curves A. is equal to the average variable cost, AVC. B. decreases as output decreases. C. is equal to the marginal cost, MC. D. is equal to the total fixed cost, TFC
- The vertical distance between the total cost curve and the total variable cost curve is: (A) total fixed cost. (B) average fixed cost. (C) marginal cost. (D) average variable cost. (E) average total cost.
- When marginal cost is greater than average total cost, A. average total cost must be increasing with output. B. average variable cost must be decreasing with output. C. average fixed cost must be increasing with output. D. marginal cost must be increas
- The average total cost (ATC) and average variable cost (AVC) converge as the level of output produced increases because: a. average fixed cost decreases as output increases. b. average total cost decreases as output increases. c. the firm experiences g
- Marginal cost is the slope of the: a. variable cost curve. b. total product curve. c. marginal product curve. d. average cost curve.
- Marginal cost is the slope of the: a. variable cost. b. total product curve. c. marginal product curve. d. average cost curve.
- Marginal cost is the slope of the: a. variable cost curve. b. total product curve. c. marginal curve. d. average cost curve.
- 1. The output range over which average product increases is the output range over which A. average variable cost decreases B. average total cost decreases C. marginal cost increases D. marginal cos
- The vertical distance between ATC and AVC measures: a. marginal cost b. total fixed cost c. average fixed cost d. economic profit per unit
- If the total variable cost curve is rising: a. the marginal cost is decreasing. b. the marginal cost is increasing. c. the average fixed cost is constant. d. the average fixed cost is increasing.
- If average variable costs are increasing while average total costs are decreasing, then A) marginal cost must lie between average variable and average total costs. B) marginal cost must equal averag
- If the marginal cost curve is below the average variable cost curve, then A. average variable costs are increasing. B. average variable costs are decreasing. C. marginal cost must be decreasing. D. average variable costs could either be increasing or decr
- If average variable costs are increasing while average total costs are decreasing, then A) marginal cost must lie between average variable and average total costs. B) marginal cost must equal average variable cost. C) marginal cost must equal the avera
- If average variable costs are increasing while average total costs are decreasing, then A) marginal cost must lie between average variable and average total costs. B) marginal cost must equal average variable cost. C) marginal cost must equal average tota
- The marginal cost curve intersects the average total cost (ATC) curve: a. at the ATC curve's maximum point. b. only when the ATC curve is sloping downward. c. when the ATC curve intersects the fixed cost curve. d. at the ATC curve's minimum point. e. on
- If the marginal product curve is intersecting the average product curve, we know that a. The average total cost curve lies below the marginal cost curve. b. The average variable cost curve is intersec
- When the average total cost curve is at its minimum, we know that the: a. marginal cost curve is above the average total cost curve. b. marginal cost curve intersects the average total cost curve. c. average fixed cost curve is above the marginal cost
- At the level of output where marginal revenue equals marginal cost, assume that the price of a competitive firm's product is between the firm's average total cost curve and its average variable cost curve. In this case, the firm would: a) decrease output
- The marginal cost curve: A. lies always below the average total cost curve (ATC). B. intersects the ATC and AVC at their minimum points. C. intersects the ATC and AVC at their maximum points. D. lies always above the average variable cost curve (AVC).
- If the marginal cost curve is rising, then which of the following must be true? A. The average total cost curve must be rising. B. The average total cost curve must be below the marginal cost curve. C. THe average total cost curve must be above the margin
- If marginal cost less than average total cost, for higher output level _____. a. both average total cost and average variable cost must be falling. b. average total cost must be falling but average variable cost may be rising or falling. c. marginal cost
- A firm's output is 80 units, its marginal cost is $42, its average variable cost is also $42, and its average fixed cost is $10. The slope of its average fixed cost curve is A. positive but the precise slope cannot be calculated. B. positive and the slope
- When the marginal cost curve lies below the average cost curve, ________. a. the average cost curve slopes downward. b. the marginal cost curve is horizontal. c. the marginal cost curve is vertical. d. the average cost curve slopes upward.
- The marginal cost curve intersects the average variable cost curve at the {Blank} value of the average variable cost curve. A. maximum B. minimum C. zero D. average 2. Marginal cost is {Blank} average variable cost when {Blank} A. equal to; average total
- The long-run average total cost curve is always: a. Flatter than the short-run average total cost curve, but not necessarily horizontal, b. Horizontal, c. Falling as output increases, d. Rising as output increases.
- The range of output over which a firm's average variable cost is decreasing is the same as the range over which its A. marginal cost is increasing. B. average product is increasing. C. average product is decreasing. D. average fixed cost is decreasing.
- If marginal cost is less than average total cost, for a higher output level: a. both average total cost and average variable cost must be falling. b. average total cost must be falling, but the average variable cost may be rising, or falling. c. marginal
- If marginal cost is below average variable cost: A. both the average total cost and average variable cost are decreasing. B. average total cost is increasing but the average variable cost is decreasing. C. both the average total cost and average variab
- When a firm's marginal cost is rising, we know that: A) average fixed cost must be rising. B) average variable cost must be rising. C) average total cost must be rising. D) marginal product must be zero. E) marginal product must be falling.
- At the level of output where marginal cost equals average variable cost: a. average total cost is minimum b. average variable cost is decreasing c. average variable cost is increasing d. average total cost is decreasing
- A competitive firm's short-run supply curve is its cost curve above its cost curve. a. average total cost, marginal b. average variable, marginal c. marginal, average total d. marginal, average variable
- If marginal cost is between average variable cost and average total cost, then: a. both average variable cost and average total cost are increasing. b. both average variable cost and average total cost are decreasing. c. average variable cost is increasin
- If the average variable cost curve is above the marginal cost curve, then: a) marginal costs must be decreasing. b) average variable costs must be increasing. c) marginal costs must be increasing. d) marginal costs can be either increasing or decreasing.
- The range over which average variable cost is decreasing is the same as the range over which: A) average product is decreasing. B) average product is increasing C) average fixed cost is decreasing D) marginal cost is increasing E) marginal product is
- Graph the marginal cost, average variable cost, average total cost, and average fixed cost of a firm.
- A firm's supply curve corresponds to: a. the average total cost curve. b. the marginal cost curve above the minimum variable cost curve. c. the average variable cost curve. d. the marginal cost curve.
- The average variable cost curve a. slopes downward at all output levels. b. intersects the average total cost curve at its minimum. c. is a horizontal line. d. intersects the average total cost curve at a high output level. e. at any output level is e
- Which cost always increases as output increases? A. Total cost B. Average total cost C. Marginal cost D. Average fixed cost
- A competitive firm's short-run supply curve is its cost curve above its cost curve. a. average total, marginal b. average variable, marginal c. marginal, average total d. marginal, average variable
- What is the distance between the average total cost curve and the average variable cost curve? A) The average fixed cost. B) The marginal cost. C) The total cost. D) The total fixed cost.
- A competitive firm's short-run supply curve is its ...................... cost curve above its ...................... cost curve. a. average variable, marginal b. average total, marginal c. marginal, average total d. marginal, average variable
- Does the average total cost curve rise as well if the marginal cost curve is rising?
- Average total cost a. increases as output increases. b. decreases as output increases. c. increases if marginal cost is increasing. d. increases if marginal cost is greater than average total cost. e. Both c and d.
- In the short run, if the average total cost is increasing as output rises, then: A) total fixed costs must be increasing. B) average fixed costs must be increasing. C) average variable cost must be increasing. D) marginal cost must be below average total
- If the marginal product curve is intersecting the average product curve, we know that A. the marginal cost curve is intersecting the average variable cost curve. B. the marginal cost curve is inters
- When the average total cost curve is downward-sloping, what must be true about the marginal cost curve? a) It is U-shaped. b) It is a straight line. c) It is upward-sloping. d) It is below the average total cost curve. e) It is above the average total co
- If the marginal cost of production is smaller than the average total cost, does this tell you whether the average total cost is increasing or decreasing? What if the marginal cost is equal to the aver
- Considering the relationship between average total cost and marginal cost, the marginal cost curve for this firm must [{Blank}] a. be U-shaped. b. be horizontal. c. be horizontal. c. lie entirely below the average total cost curve. d. lie entirely above t
- Under decreasing returns to scale, average cost (increases/decreases) as quantity produced increases. Over this range of output, the marginal cost curve is (higher than/lower than/equivalent to) the average cost curve.
- The short-run supply curve of a perfectly competitive firm is: A. it is average fixed cost curve. B. the part of its marginal cost curve rising above the average variable cost curve. C. the part of its marginal cost curve below the average variable cost c
- Marginal cost is equal to both average variable cost and average total cost when: a. average total cost and average variable cost are decreasing. b. average variable cost and average total cost are their minimums. c. the marginal product of labor is incre
- If average total cost is rising (a) marginal cost is above average total cost. (b) marginal cost is rising. (c) marginal product is rising. (d) marginal cost is above average total cost and is falling.
- A perfectly competitive firm's supply curve follows the upward sloping segment of its marginal cost curve above the a. average total cost (ATC) curve. b. average variable cost (AVC) curve. c. average fixed cost (AFC) curve. d. average price (APC) curv
- The marginal cost curve intersects the average variable cost curve at the value of the average variable cost curve. a. maximum b. minimum c. zero d. average
- If marginal cost is above average variable cost, then: a) Average variable cost is increasing, b) Marginal cost must be decreasing, c) Average variable cost is constant, d) Average variable cost is decreasing, e) There are fixed costs.
- A firm's short-run supply curve is equal to the firm's: a. marginal cost curve above minimum average total cost (ATC). b. demand curve. c. marginal revenue curve. d. marginal cost curve below minimum average variable cost (AVC). e. marginal cost curv
- Tip: draw a graph.) In the range of output levels where the marginal cost curve is above an average cost curve (ATC or AVC), the average cost is: - increasing as output increases. - none of other answers. - declining as output increases. - does not cha
- If marginal cost is greater than average variable cost, a. average variable cost is decreasing. b. average variable cost is increasing. c. marginal cost is less than average variable cost. d. average variable cost is negative.
- In the short run, the marginal cost curve crosses the average total cost curve at: A. a point just below the average fixed cost curve. B. the minimum point of the average total cost curve. C. the maxi
- The marginal cost curve intersects the average total cost curve at the level of output where the average total cost is at a minimum because: A. the firm begins experiencing economies of scale at this quantity. B. when the marginal cost of the last unit pr
- Increasing returns to scale for a firm is shown graphically by: (A) a horizontal long-run average cost curve. (B) a vertical long-run average cost curve. (C) an upward-sloping long-run average cost curve. (D) a downward-sloping long-run average cost cu
- A firm short-run supply curve is equal to the firm's (a) marginal revenue curve (b) demand curve (c) marginal cost curve above minimum average total cost (ATC) (d) marginal cost curve below minimum average variable cost (AVC) (e) marginal cost curve above
- A firm short-run supply curve is equal to the firm's a) marginal revenue curve. b) demand curve. c) marginal cost curve above the minimum average total cost (ATC). d) marginal cost curve below the minimum average variable cost (AVC). e) marginal cost curv
- If the average variable cost of a firm is falling, then the: ____. a. marginal cost must be falling. b. average fixed cost must be rising. c. marginal cost lies below the average variable cost. d. marginal cost must be rising. e. marginal cost lies above
- 1. The supply curve for this perfectly competitive firm is the segment of the: A) average total cost curve above point D. B) average variable cost curve above point C. C) marginal cost curve above p
- When the average total cost curve is at its minimum? a. average variable cost curve intersects the average total cost curve. b. average variable cost curve is above the average total cost curve. c. ma
- A price-taking firm's short-run supply curve is a. the portion of its marginal cost curve above the average variable cost curve. b. its average total cost curve. c. its average variable cost curve. d. its entire marginal cost curve. e. none of the ab
- A purely competitive firm's short-run supply curve is: A. the upward sloping portion of its average cost curve. B. the upward sloping portion of its average variable cost curve. C. its marginal cost curve above average variable cost. D. its average variab
- When the marginal-cost curve lies: a. above the ATC curve, ATC rises. b. above the AVC curve, ATC rises. c. below the AVC curve, total fixed cost increases. d. below the ATC curve, total fixed cost falls.
- In the price range above minimum average variable cost, a perfectly competitive firm's supply curve is: A. horizontal at the market price. B. the same as its total variable cost curve. C. vertical at zero output. D. the same as its average variable co
- When marginal cost is below average variable cost, average variable cost must be: A. above average total cost. B. rising. C. below average total cost. D. falling.
- A firm is productively efficient if it produces at the minimum point of its: a. average variable cost curve. b. marginal cost curve. c. average total cost curve. d. total cost curve.
- As a firm increases its output, which of the following costs should decrease? A. Average total cost B. Average variable cost C. Marginal cost D. Average fixed cost
- A firm's short-run supply curve is part of which of the following curves: a. Marginal revenue, b. Average variable cost, c. Average total cost, d. Marginal cost.
- 14. Average variable cost may be either increasing or decreasing when a) marginal cost is decreasing b) marginal product is increasing c) average fixed cost is decreasing d) average total cost is inc
- As the price of a good fluctuates, a profit-maximizing firm will expand or contract production along its: a. average cost curve b. average product curve c. marginal cost curve d. marginal product curve
- If the marginal cost is $50 and the average total cost is $75, we can be sure that: a. marginal cost is rising. b. average total cost is rising. c. marginal cost is falling. d. average total cost is falling.
- A firm's cost curve is TC(q) = 250 + 10q + 2q^2, q is the quantity produced. What is the firm's marginal cost (MC), average variable cost (AVC), and average total cost (ATC)?
- Is the slope of the short-run total cost curve equal to the slope of the short-run variable cost curve at every output?
- If the average total cost is decreasing as more and more units are produced, then the marginal cost must be A) rising. B) constant. C) negative. D) below the average total cost. E) equal to the average total cost.
- The short-run supply curve for a perfectly competitive firm is given by: a. the entire marginal cost curve. b. the marginal cost curve at and above average variable cost. c. the marginal cost curve at and above average total cost. d. the average variable
- Marginal cost is average variable cost when. a. equal to; average total cost is minimized b. less than; total cost is maximized c. greater than; average fixed cost is minimized d. equal to; average variable cost is minimized
- Which of the following is true of the relationship between the marginal cost function and the average total cost and average variable cost functions? (a) The MC curve, ATC curve, and AVC curve all intersect at the same point. (b) If MC is greater than ATC
- Consider a firm's short-run cost curves. If average total cost is increasing as output rises, then: A) total fixed costs must be increasing B) average fixed costs must be increasing. C) average variable cost must be increasing. D) marginal cost must be
- Diseconomies of scale are illustrated by: a. a downward sloping long-run average cost curve. b. an upward-sloping long-run average cost curve. c. an upward-sloping short-run average total cost curve. d. a flat long-run average cost curve.
- The marginal cost curve slopes downward at low outputs because of _____. The marginal cost curve eventually slopes upward because of _____. A) the law of diminishing returns; increasing average fixed cost. B) the law of diminishing returns; greater specia
- If the average total cost is decreasing as more and more units are produced, then the marginal cost must be A. rising. B. constant. C. negative. D. below average total cost. E. equal to average total cost.
- A competitive firm's short-run supply curve is its ________ cost curve above its ________ cost curve. 1) average total, marginal 2) average variable, marginal 3) marginal, average total 4) margina
- A firm's supply curve is the same as: 1) the upward-sloping portion of the marginal product curve. 2) the upward-sloping portion of the marginal cost curve. 3) the marginal cost curve above the average total cost curve. 4) the marginal cost curve above th
- Average total cost is increasing whenever: A. total cost is increasing B. marginal cost is greater than average total cost C. marginal cost is increasing D. marginal cost is less than average total cost
- The minimum point on the Blank is the least cost combination. a. average cost curve. b. average variable cost curve. c. marginal revenue curve. d. marginal cost curve.
- The marginal cost curve intersects the average variable cost curve at the level of output where average variable cost is at a minimum because: A. the firm begins benefiting from division of labor at this quantity. B. when the marginal cost of the last un
- The short-run supply curve for a firm in a perfectly competitive industry is its: A. average cost curve B. average variable cost curve C. marginal cost curve above the lowest point of the average variable cost curve D. marginal cost curve above the lowest
- When marginal cost curve is below an average cost curve, average cost is A. increasing with output. B. declining with output. C. not varying with output. D. none of the statements associated with
Explore our homework questions and answers library
Browse
by subject