Chapter 17

Explain why the average fixed cost curve (AFC) slopes downward throughout, while the average variable cost curve (AVC) slopes down at first, but then turns upward.

Given: $\mathrm{TC}=\mathrm{FC}+\mathrm{VC}$ prove that: $\mathrm{ATC}=\mathrm{AFC}+\mathrm{AVC}$

What are the difference between Marginal Fixed Cost (MFC), Marginal Variable Cost (MVC) and Marginal Total Cost (MC)?

The National Widget Corporation currently holds a five-year lease on their factory, on which they have four more years left before the lease runs out. Beginning this month, the landlord has been allowed to pass along a $\mathrm{\$}100$ per month "fuel adjustment surcharge." If, every month, NWC's economists (by some miracle) are able to chart their cost curves for the upcoming month, how would the cost curves have changed to reflect this fuel surcharge, assuming that no other factors have changed?

What is the principle of diminishing marginal returns?

What is meant by the term "long run"?

Could a Short Run Average Cost curve ever contain a point below the Long Run Average Cost curve? Why or why not?

Given the Long Run Average Cost curve, LAC, could the Short Run Average Cost curves ${\mathrm{SAC}}_1,{\mathrm{SAC}}_2,{\mathrm{SAC}}_3$, and ${\mathrm{SAC}}_4$ all correspond to the given LAC in Figure $1?$