Total Cost of Production Is the Sum of Total Variable

question 162

Multiple Choice

Total cost of production is the sum of total variable cost and total fixed cost. If the total fixed cost alone increases

• A) the average total cost curve shifts downward at all output levels.
• B) the marginal cost curve shifts upward at all output levels.
• C) the vertical distance between the average total cost curve and average variable cost curve increases at all output levels.
• D) the average variable cost curve shifts upward at all output levels.

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Definitions:

Equilibrium

A state in economic models where supply equals demand, leading to a stable market price and quantity.

Positive Profits

Financial gains realized when the total revenues of a business exceed its total costs.

Pure Monopolist

A single seller in a market that produces a unique product without close substitutes, having significant control over the market price.

Profit-Maximizing Output

The level of production at which a company achieves the highest possible profit, where marginal cost equals marginal revenue.