Total Cost Divided by the Quantity of Output the Firm

question 102

Multiple Choice

Total cost divided by the quantity of output the firm chooses when it can choose a production facility of any size describes

• A) the short-run average cost of production.
• B) the long-run average cost of production.
• C) the short-run marginal cost of production.
• D) the long-run marginal cost of production.

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Definitions:

Profit-Maximizing

A business strategy focused on increasing profits to the highest possible level given the firm's constraints.

Wheat

A cereal grain that is a worldwide staple food, used to make a wide range of products including bread, pasta, and cereal.

Price

The amount of money required to purchase a good or service; determined by factors such as demand, supply, and production cost.

Shutdown Point

The lowest point on the average variable cost curve. When price falls below the minimum point on AVC, total revenue is insufficient to cover variable costs and the firm will shut down and bear losses equal to fixed costs.