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.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)

14th Edition

ISBN:9781305506381

Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris

Chapter2: Fundamental Economic Concepts

Section: Chapter Questions

Problem 2E

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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 Total cost of producing a certain quantity of a good, divided by the quantity produced. It is the sum of all costs (fixed and variable) required to produce one unit of output.

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