ReviewEcon - Cost Curves

What is the formula for calculating Marginal Cost (MC)?

• MC = ∆TC/∆Q

• MC = TC/Q

• MC = VC/Q

• MC = FC/Q

Which cost curve intersects the Average Total Cost (ATC) and Average Variable Cost (AVC) at their minimum points?

• Marginal Cost (MC)

• Fixed Cost (FC)

• Variable Cost (VC)

• Total Cost (TC)

What happens to Average Fixed Costs (AFC) as output increases?

• AFC increases

• AFC remains constant

• AFC decreases

• AFC fluctuates

What is the relationship between Average Variable Cost (AVC) and Marginal Cost (MC)?

• AVC decreases until it intersects MC, then increases

• AVC increases until it intersects MC, then decreases

• AVC remains constant throughout

• AVC is always greater than MC

What is the term for the smallest quantity of output where the Long-Run Average Total Cost (LRATC) is at its lowest?

• Economies of Scale

• Diseconomies of Scale

• Minimum Efficient Scale

• Constant Returns to Scale

What happens to the Long-Run Average Total Cost (LRATC) curve when a firm experiences diseconomies of scale?

• It becomes flat

• It slopes downward

• It slopes upward

• It remains constant

How can you calculate Average Fixed Cost (AFC) for a given quantity?

• Divide Fixed Cost (FC) by Quantity (Q)

• Subtract Average Variable Cost (AVC) from Average Total Cost (ATC)

• Multiply Average Fixed Cost (AFC) by Quantity (Q)

• Add Fixed Cost (FC) and Variable Cost (VC)