Home › AP Microeconomics › Economics › Production, Costs and Industry Structure › The cost of producing a firm's output depends on…
The cost of producing a firm's output depends on how much it uses of labour and:
AAccounting profit
BConsumer surplus
CMarginal revenue
DPhysical capital
Answer & Solution
Correct answer: D. Physical capital
1. Costs come from the inputs a firm buys.
2. The cost of producing a firm's output depends on how much labor and physical capital the firm uses.
3. Labour is typically the variable input and capital the fixed one in the short run.
4. Profit and surplus are results of production rather than inputs to it.
_Source: OpenStax Principles of Microeconomics for AP(R) Courses 2e (CC BY 4.0), Ch 7 'Production, Costs and Industry Structure', sections 7.1-7.4_
Related questions
Diminishing marginal returns is described as the general concept behind:The reason capital is treated as the fixed input in the short run is that it:Economies of scale become relevant only after a firm has settled its:Implicit costs are described as more subtle than explicit costs but:A firm reporting positive accounting profit could still be making:Accounting profit differs from economic profit because accounting profit leaves out:Breaking total costs into fixed and variable parts provides the basis for calculating:Once a firm has chosen its least costly production technology, it next considers the: