AY22_Sem1_B220_L08

In the short run, which of the following costs will remains constant as output produced increases?

• Total variable cost

• Total fixed cost

• Average total cost

• Average fixed cost

Marginal cost is the additional cost that results from increasing output by one unit.

• True

• False

Which of the following is FALSE about Average Total Cost (ATC)?

• ATC = Total Cost / Output

• ATC = Average Fixed Cost + Average Variable Cost

• ATC = Total Fixed Cost / Output

What are Internal Economies of Scale?

• Cost benefits that an individual firm can enjoy when it expands.

• Cost benefits with improvements in the transport system.

• Cost benefits that all firms in an industry can enjoy when the industry expands.

• Rising cost as a result of coordination inefficiencies as an individual firm expands.

The effect of _______ will raise a firm's Long Run Average Curve (LRAC) from LRAC to LRAC1.

• Internal Economies of Scale

• Internal Diseconomies of Scale

• External Economies of Scale

• External Diseconomies of Scale