Cost Analysis in Economics Quiz

Marginal cost represents the extra cost incurred in producing an additional unit of output.

Average variable cost is calculated by dividing the total variable cost by the quantity of output.

Rent for factory space is a fixed cost as it remains constant regardless of the level of production.

Cost-benefit analysis aims to evaluate the positive and negative aspects of a decision or project.

Economies of scale indicate the reduction in average total cost with an increase in production levels.

Average fixed cost is computed by dividing the total fixed cost by the quantity of output.

Sunk costs are expenses that cannot be recovered and are irrelevant to future decision-making in economic analysis.

Total cost equals the sum of total variable cost and total fixed cost.

Opportunity cost is referred to as the 'avoidable cost' as it represents the value of the next best alternative foregone.

Explicit costs require direct monetary payments, while implicit costs represent non-monetary sacrifices.

The breakeven point signifies the level of output where total revenue equals total cost, resulting in no profit or loss.

Accounting profit considers only direct costs, while economic profit accounts for both direct and indirect costs.

At the profit-maximizing output level, marginal cost is equal to marginal revenue.