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2 cards from this section. Quick, good the night before a test.
Define fixed costs and give an example.
Think about costs that remain constant even if you don't produce anything.
What are variable costs? Provide one example.
These costs go up or down based on how much you produce.
What type of costs remain constant regardless of output?
Consider what would still be the same if you produced nothing.
True or False: Marginal cost is the additional cost of producing one more unit.
Think about what happens when you increase production slightly.
A firm plans to produce 100 units of its product. It has fixed costs of $2000 and variable costs of $50 per unit. Calculate the total cost and unit cost.
Use the formulas for total and unit costs.
If a company discovers that its marginal cost is lower than the price at which it sells its product, what should it consider doing?
Think about the relationship between cost and revenue.
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