Match each short-run cost concept on the left with its correct definition or property on the right.
- Total Fixed Cost (TFC)Cost that remains constant regardless of the quantity of output produced
- Marginal Cost (MC)The addition to total cost resulting from producing one extra unit of output
- Average Variable Cost (AVC)Total variable cost divided by the total quantity of output produced
- Average Fixed Cost (AFC)Total fixed cost divided by quantity, which continuously declines as output increases
Answer
Total Fixed Cost (TFC) matches with 'Cost that remains constant regardless of the quantity of output produced'; Marginal Cost (MC) matches with 'The addition to total cost resulting from producing one extra unit of output'; Average Variable Cost (AVC) matches with 'Total variable cost divided by the total quantity of output produced'; Average Fixed Cost (AFC) matches with 'Total fixed cost divided by quantity, which continuously declines as output increases'.
Total Fixed Cost represents expenses that remain constant regardless of output. Marginal Cost measures the additional cost incurred when producing one extra unit. Average Variable Cost is total variable cost per unit of output. Average Fixed Cost is total fixed cost per unit of output, which declines continuously as output expands.
Step-by-Step Solution
Key Concept
Definitions and properties of short-run cost concepts