C. True or False; Please explain1. All fixed costs are sunk costs.2. Consider the relationship between the long-run total cost curve and the marginal and averagecost curve. The slope of the total cost curve at each point is how you derive the marginal cost curvewhile the slope from the origin to a point on the total cost curve is how you derive the average costcurve.3. When the production function is given by Q = L, TC = wQ, L = Q and AC = w.4. In a competitive market different consumers may pay different prices for the same product.5. A profit-maximizing firm never produces where P < AC.

Costs that have already been incurred and cannot be recovered, regardless of what is done in the…

Answered: 1. All fixed costs are sunk costs.

Business

Economics

1. All fixed costs are sunk costs.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

C. True or False; Please explain
1. All fixed costs are sunk costs.
2. Consider the relationship between the long-run total cost curve and the marginal and average
cost curve. The slope of the total cost curve at each point is how you derive the marginal cost curve
while the slope from the origin to a point on the total cost curve is how you derive the average cost
curve.
3. When the production function is given by Q = L, TC = wQ, L = Q and AC = w.
4. In a competitive market different consumers may pay different prices for the same product.
5. A profit-maximizing firm never produces where P < AC.

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