Recap on Cost Theory

According to the Law of Diminishing Marginal _________, the more you use of a variable input (like labor or physical capital), the less it will increase output.

• Demand

• Supply

• Returns

• Love

Types of cost are

• fixed and variable

• Avg and full

The shape of Marginal cost is

• U shaped

• S shaped

The MC curve cuts AC at its

• highest point

• minimum point

ATC is a summation of

• AFC and AVC

• FC and VC

The shape of AFC is

• rectangular hyperbole

• S shaped

Cost per unit of output is

• AC

• MC

Change in cost is

• MC

• AC

Salary given to permanent staff is an example of which kind of cost

• fixed cost

• variable cost

Short run marginal costs eventually increase because of the effects of:

• increasing marginal product
• diminishing marginal product
• increasing fixed costs
• diseconomies of scale