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Chapter 20: Problem 9

Total cost is the sum of __________ (LO1) a) marginal cost and fixed cost b) marginal cost and variable cost c) variable cost and fixed cost

Short Answer

Expert verified
The total cost is the sum of variable cost and fixed cost.

Step by step solution

01

Understand the Different Types of Costs

Fixed costs are costs that do not change with the level of production. For example, rent or equipment costs. Variable costs are costs that change with the level of production, such as raw materials or labor costs. Marginal cost is the additional cost required to produce one more unit of output.
02

Finding Total Cost

Total cost includes all costs that the producer incurs to create the desired output level. To find the total cost, we need to add fixed costs, which don't change with the level of output, and variable costs, which change with the level of output. Therefore, the correct answer is: c) variable cost and fixed cost

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Most popular questions from this chapter

As output rises, the difference between ATC and AVC __________ (LO5) a) rises b) stays the same c) falls

If price is above ATC, the firm will __________ (LO6, 8) a) shut down in the short run and go out of business in the long run b) shut down in the short run and stay in business in the long run c) operate in the short run and go out of business in the long run d) operate in the short run and stay in business in the long run

Each of the following provides an example of economies of scale except __________ ( LO7) a) the computer software industry b) the pharmaceutical industry c) Adam Smith's pin factory d) movie and TV production e) the services of psychiatrists, personal trainers, barbers, and beauticians

Which of the following is most likely to be a variable cost? (LO1) a) Real estate taxes b) Rental payments of IBM equipment c) Interest on bonded indebtedness d) Fuel and power payments

The marginal cost curve intersects __________ at its/their minimum point(s). (LO5) a) the ATC, but not the AVC b) the AVC, but not the ATC c) both the ATC and the AVC d) neither the ATC nor the AVC
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