question
AVC always rises when below
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marginal costs
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AVC are increasing when marginal costs are
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higher than AVC
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Output of firm doubles when the inputs of the firm doubles equals
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constant returns to scale
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When P=AVC
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economic profits are zero
question
in the short run of a market at the firms profit-maximizing output level
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price will exceed ATC and new firms will enter in the long run
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in the short run of a market at the firms profit-maximizing output level economic profit will not
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equal zero
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in the short run of a market at the firms profit-maximizing output level marginal costs will not
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equal ATC
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Short-run marginal costs eventually increase because of the effects of
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demising marginal product
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If the firm is experiencing economies of scale the long run average total cost will
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decrease
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accounting profits=
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TR+implicit costs
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economic profits=
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TR+implicit costs+explicit costs
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In the short run is the firm has economic losses and continue to produce then the firm is covering
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all variable costs but not fixed.
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