Question 4 If firms are competitive and profit maximizing, the price of a good equals the... Group of answer choices marginal cost of production. average variable cost of production. total cost of production. average total cost of production.

Question 4 If firms are competitive and profit maximizing, the price of a good equals the... Group of answer choices marginal cost of production. average variable cost of production. total cost of production. average total cost of production.

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 4CQQ

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Concept explainers

Cost of Production

In economic theory, production costs are the costs incurred by an industrial organization when it engineers a project or provides a service that generates revenue and benefits. Labor costs, raw materials, consumable manufacturing costs, and general overhead sum up, accounting for production costs. Total cost data is calculated by combining total direct costs of materials, labor costs, and total production costs.

Question

Question 4

If firms are competitive and profit maximizing, the price of a good equals the...

Group of answer choices

marginal cost of production.

average variable cost of production.

total cost of production.

average total cost of production.

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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