Answered: Restaurants in tourists' areas will…

Restaurants in tourists' areas will close during the off-season if their: AFC is greater than their TR. ATC is less than their TR. AVC is greater than their TR. AFC is less than their TR.

Survey Of Economics

10th Edition

ISBN:9781337111522

Author:Tucker, Irvin B.

Publisher:Tucker, Irvin B.

Chapter6: Proudction Costs

Section: Chapter Questions

Problem 8SQP

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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

Restaurants in tourists' areas will close during the off-season if their:

	AFC is greater than their TR.
	ATC is less than their TR.
	AVC is greater than their TR.
	AFC is less than their TR.

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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