Supply and Demand Analysis

question 67

Multiple Choice

Supply and demand analysis

• A)can be used to understand solutions to pollution, but not causes.
• B)can be used to analyze how externalities lead to environmental problems.
• C)cannot be used to analyze pollution, which is a physical and chemical problem.
• D)cannot be used to solve the pollution problem, but can be used to analyze it.

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Definitions:

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the quantity of output produced.

AFC

Average Fixed Cost, which is the fixed costs of production divided by the quantity of output produced; a measure of economies of scale.

AVC

Average Variable Cost is the per-unit variable cost of production, which changes with the level of output.

Average Variable Cost

The cost per unit of output that varies directly with the volume of production, excluding fixed costs.