Exhibit 7-9 Cost schedule for firm X
OutputQuantity
Total FixedCost
Total VariableCost
0
$100
$ 0
1
100
50
2
100
84
3
100
108
4
100
127
5
100
150
As shown in Exhibit 7-9, the total cost of producing 4 units is:
A. zero.
B. $227.
C. $250.
D. $100.
Answer: B
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A sunk cost has no effect on supply because it
A) applies to all suppliers. B) can be passed on to consumers. C) cannot be avoided by not supplying. D) cannot be passed on to consumers. E) did not have to be incurred in order for the good to be supplied.
Last month, the Tecumseh Corporation supplied 400 units of three-ring binders at $6 per unit. This month, the company supplied the same quantity of binders at $4 per unit. Based on this evidence, Tecumseh has experienced
A) an increase in supply. B) a decrease in the quantity supplied. C) an increase in the quantity supplied. D) a decrease in supply.
Distinguish among public goods, private goods, common resources, and natural monopoly goods
What will be an ideal response?
A small reduction in a country's growth rate is a concern to policy makers because
A) a small change can have large effects on per capita GDP over time. B) a reduction usually leads to future reductions until finally the economy stagnates. C) policy makers focus too much on economic growth and not enough on increasing savings rates. D) the larger GDP is the better the economic welfare will be in the future.