7th quiz

In the short run

• existing firms do not face limits imposed by a fixed input

• all firms have costs that they must bear regardless of their output

• new firms can enter an industry

• existing firms can exit an industry

Answer explanation

Which type of cost does not depend on a firm's output?

• fixed cost

• variable cost

• total cost

• marginal cost

Which type of cost does depend on a firm's output?

• variable cost

• total cost

• marginal cost

• all of the above

Economists usually assume that ________ is a fixed input in the ________ run.

• labor; short

• capital; short

• labor; long

• capital; long

Total variable cost ________ as output increases, and total fixed cost ________ as output increases.

• increases; increases

• increases; decreases

• increases; does not change

• does not change; does not change

The formula for total fixed cost is

• TFC = TC + TVC

• TFC = TVC -TC

• TFC = TC/TVC

• TFC = TC -TVC

Total cost is calculated as

• the sum of total fixed cost and total variable cost

• the product of average total cost and price

• the sum of all the firm's explicit costs

• the sum of average fixed cost and average variable cost

Wilbur's Widgets, a widget company, produces 100 widgets. Its average fixed cost is $5 and its total variable cost is $300. What is the total cost of producing 100 widgets?

• $300

• $305

• $500

• $800

Firms have ________ over their ________ costs in the short run

• control; fixed

• no control; fixed

• control; overhead

• no control; variable

The formula for average fixed costs is

• TFC - q

• TFC/q

• q/TFC

• ) Δq/ΔTFC