In the shortrun, Average fixed costs must continuously decrease as output increases. Average fixed cost is the total fixed cost per unit of output incurred when a firm engages i...
The correct answer is e) Total cost and Variable cost. The marginal cost is always positive. This means that each subsequent unit adds cost.
Initially, the variable cost per unit of output decreases as output increases. At one point, it reaches a low. After the low, the variable cost per unit of output starts to increase. The increase in AVC after a certain point is indirectly related to the law of diminishing marginal returns.
Marginal Cost. Marginal Cost is the increase in cost caused by producing one more unit of the good. The Marginal Cost curve is U shaped because initially when a firm increases its output, total costs, as well as variable costs, start to increase at a diminishing rate.
The correct answer is A. Total cost. Total cost is the entire cost used in the production of a commodity.
Marginal costs It can be found by calculating the change in total cost when output is increased by one unit. It is important to note that marginal cost is derived solely from variable costs, and not fixed costs. The marginal cost curve falls briefly at first, then rises.
Average fixed cost is fixed cost per unit of output. As the total number of units of the good produced increases, the average fixed cost decreases because the same amount of fixed costs is being spread over a larger number of units of output.
Fixed costs do not vary with the production level. Total fixed costs remain the same, within the relevant range. However, the fixed cost per unit decreases as production increases, because the same fixed costs are spread over more units.
The variable cost of production is a constant amount per unit produced. As the volume of production and output increases, variable costs will also increase. Conversely, when fewer products are produced, the variable costs associated with production will consequently decrease.
Marginal costs decrease whenever the marginal revenue product of labor increases—workers become more skilled, new production techniques are adopted, or changes in technology and capital goods increase output.
Marginal benefit is a small but measurable benefit to a consumer if they use an additional unit of a good or service. Marginal benefit usually declines as a consumer decides to consume more of a single good. For example, imagine a consumer purchases a ring for her right hand.
The changing law of marginal cost is similar to the changing law of average cost. They are both decrease at first with the increase of output, then start to increase after reaching a certain scale. While the output when marginal cost reaches its minimum is smaller than the average total cost and average variable cost.