Costs

1. The marginal costs intersect the average variable costs at their minimum. 2. The producer surplus is equivalent to profits plus variable costs. 3. In the short run, a firm will supply a positive amount to the market until the profits at least cover the fixed costs. 4. The average variable costs of the cost function $$C(y)=y^{3}+2y+10$$ C ( y ) = y 3 + 2 y + 10 are $$AVC(y)=y^{2}+2$$ A V C ( y ) = y 2 + 2 . An entrepreneur produces a good by means of capital and his or her own labor. 1. The economic costs for one unit of his or her own labor equal the wage rate that the entrepreneur could have earned in a different job. 2. The economic costs for one unit of capital can become negative. 3. The economic costs for one unit of capital lower the entrepreneur’s profit. 4. The economic costs for one unit of capital are equal to the market interest rate. A firm has the cost function $$C(y)=y^{3}+50$$ C ( y ) = y 3 + 50 . 1. The marginal costs are $$MC(y)=2\cdot 2y^{2}$$ M C ( y ) = 2 ⋅ 2 y 2 . 2. The average costs are $$AC(y)=y^{2}+\frac{50}{y}$$ A C ( y ) = y 2 + 50 y . 3. The average costs are monotonically increasing in y. 4. Average costs and average variable costs are identical for $$y\to\infty$$ y → ∞ . 1. The function of technological fixed costs is a continuous function. 2. The average cost function cannot be identical to the marginal cost function. 3. The average fixed costs decrease as production increases for all y > 0. 4. Fixed costs can be divided into technological and technical fixed costs.