Labor Quantity Total cost AFC AVC ATC 0 0 160 خر 8 200 2 12 360 What is the Total Fixed Cost? O 320 200 160 O 40 30

Are fixed costs also sunk costs? Explain.

What is die difference between accounting and economic profit?

A common name for fixed cost is overhead. If you divide fixed cost by the quantity of output produced, you get average fixed cost. Supposed fixed cost is 1,000. What does the average fixed cost curve look like? Use your response to explain what spreading the overhead means.

Return to Figure 7.7. What is the marginal gain in output from increasing the number of batters from 4 to 5 and from 5 to 6? Does it continue the pattern of diminishing marginal returns? Figure 7.7 How output Affects Total costs

Average cost curves (except for avenge fixed cost) tend to be U-shaped, decreasing and then increasing. Marginal cost curves have the same shape, though this may be harder to see since most of the marginal cost curve is increasing. Why do you think that average and marginal cost curves have the same general shape?

What is the difference between economies of scale, constant returns to scale, and diseconomies of scale?

What shapes would you generally expect each of the following cost curves to have: fixed costs, variable costs, marginal costs, average total costs, and average variable costs?

What shape of a long-run average cost curve illustrates economies of scale, constant returns to scale, and diseconomies of scale?

How do we calculate each of the following: marginal cost, average total cost, and average variable cost?