Average costs, variable costs, fixed costs, total costs

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  • Created by: Jade
  • Created on: 17-11-12 14:20

1. On typical short run cost curves, which cost curve runs through the lowest point of both average variable cost curve and average cost curve?

  • Average total cost curve
  • Marginal cost curve
  • Average fixed cost curve
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2. What is long run?

  • Time period when the lowest level of output where long-run average cost (LRAC) is minimised.
  • Time period when all factor inputs can be changed
  • Time period when a firm is unable to change factors of production except for one, usually labour.

3. What are costs?

  • The revenue from inputs that are needed to produce a good or service
  • The monetary value of inputs that are needed to produce a particular good or service
  • The value of inputs that are needed to produce a good

4. What are fixed costs?

  • Costs that are independent of output produced e.g. rent, interest paid on loans
  • Costs that vary directly with output produced e.g. labour, fuel, raw material costs
  • The total cost of production or provision of a service

5. Where aircraft are owned by the airline, this is the cost of what?

  • Any loaned finance and also depreciation
  • Any loaned finance
  • Any debt



10 questions on costs that can provide a break from more intensive studying.

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