Cost of Production Video Review

What is an example of a fixed cost? (two correct answers)

• workers in a pizza shop

• the oven to make pizzas

• the ingredients to make pizza dough

• the manager's salary

How do you find marginal cost? (Select all that apply)

• Divide the additional cost of each worker by the additional output

• add your fixed and variable costs together then multiply by units produced

• Change in Total Expenses ÷ Change in Quantity of Units Produced

• divide the change in production costs by the change in quantity.

Use the chart below to calculate the change in quantity and the change in total cost for 100 units of production, 200 units of production, 300 units of production and 400 units of production. Then find the marginal cost at these different levels of output.

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Which color represents the marginal cost curve?

• Orange

• Yellow

• Green

• Blue

Why is the AFC or Average Fixed Cost curve downward sloping?

• The AFC curve remains constant regardless of output levels.
• The AFC curve is downward sloping because fixed costs are spread over a larger number of units as output increases.
• The AFC curve is influenced by changes in demand for the product.
• The AFC curve is upward sloping due to increasing variable costs.