A firm that has positive accounting profit does not necessarily have positive economic profit. True or false? Explain. 6) Assume that marginal cost in production is greater than average variable costs. Can you determine whether average variable cost is decreasing or increasing?

A firm that has positive accounting profit does not necessarily have positive economic profit. True or false? Explain. 6) Assume that marginal cost in production is greater than average variable costs. Can you determine whether average variable cost is decreasing or increasing?

Essentials of Economics (MindTap Course List)

8th Edition

ISBN:9781337091992

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter12: The Cost Of Production

Section: Chapter Questions

Problem 3CQQ

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Question

5) A firm that has positive accounting profit does not necessarily have positive economic profit. True or false? Explain.
6) Assume that marginal cost in production is greater than average variable costs. Can you determine whether average variable cost is decreasing or increasing? Explain.

Definition Definition Measure of the cost of production per unit of output, including only variable costs such as wages, materials, and utilities. AVC is calculated by dividing total variable cost by the number of units produced. Understanding average variable cost is important for businesses to make decisions on pricing, production levels, and profitability.

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