Economic Costs and Optimization Quiz

Monetary cost is a type of economic cost.

Total cost is the sum of fixed and variable costs in economics.

Cost minimization in economics aims to reduce total production cost while maintaining a specific level of output.

Rent for factory space is a fixed cost as it remains constant irrespective of production levels.

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

In monopolistic competition, firms have some control over market price due to product differentiation.

Marginal cost is the extra cost incurred in producing one additional unit of a good or service.

For optimal decision-making in economics, the marginal benefit should surpass the marginal cost.

Explicit costs involve direct monetary payments, whereas implicit costs represent the opportunity cost of resources used.

Perfectly competitive markets have no barriers preventing firms from entering or exiting the market.

At the minimum point of average variable cost (AVC), it equals marginal cost (MC).

Economic profit is the total revenue minus both explicit and implicit costs.

Diminishing marginal returns occur when the increase in output decreases with the addition of more units of input, with other inputs held constant.

Economic efficiency in economics is achieved when marginal cost equals marginal benefit, maximizing overall welfare.

Opportunity cost is the value of the next best alternative forgone when a decision is made.

Diseconomies of scale occur when the average total cost increases as the level of output increases.

Explicit costs are directly paid in money, while implicit costs represent the opportunity cost of resources.