If the firm increases the volume of used resources by 30%, and the volume of production thus increases by 20%, then there is a positive effect of the production scale. b) Average fixed costs decrease as production increases. c) The economic profit usually exceeds the accounting profit.

If the firm increases the volume of used resources by 30%, and the volume of production thus increases by 20%, then there is a positive effect of the production scale. b) Average fixed costs decrease as production increases. c) The economic profit usually exceeds the accounting profit.

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter3: Benefits, Costs, And Decisions

Section: Chapter Questions

Problem 2MC

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Concept explainers

Explicit and Implicit Cost Analysis

The entire idea of the cost of production or production cost is applied corresponding or we can say that it is related to money cost. Money cost refers to any money expenditure which the firm or supplier or producer undertakes in purchasing or hiring factors of production or factor services.

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Question: Indicate whether the following statemnts are true or false:-

a) If the firm increases the volume of used resources by 30%, and the volume of production thus increases by 20%, then there is a positive effect of the production scale.

b) Average fixed costs decrease as production increases.

c) The economic profit usually exceeds the accounting profit.

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