How do we calculate average fixed cost and why does average fixed cost fall as output increases?
What will be an ideal response?
Average fixed cost is calculated by dividing total fixed cost by the quantity of output. Because total fixed cost stays the same for all levels of output, as the quantity produced increases, the average fixed cost decreases.
You might also like to view...
The technology associated with manufacturing computers has advanced enormously. This change has led to the price of a computer ________ and the quantity ________
A) rising; increasing B) rising; decreasing C) falling; increasing D) falling; decreasing E) falling; not changing
What happens in a duopoly if both firms try to act as the Stackelberg leader?
What will be an ideal response?
Cost pull inflation occurs when the:
A. price of a key input increases suddenly. B. price level changes in response to changes in the business cycle. C. price of necessity goods increases suddenly. D. business cycle becomes sporadic and unpredictable.
If it takes one country two units of labor to produce a computer and three units of labor to produce a TV, but it takes the other country three units of labor to produce a computer and four to produce a TV, then the first country has
A. an absolute advantage in TVs and computers but a comparative advantage in TVs only. B. a comparative advantage in both goods. C. an absolute advantage in TVs and computers but a comparative advantage in computers only. D. an absolute advantage in TVs but a comparative advantage in computers.