-Which of the Following Is True of Exhibit 6-25

question 47

Multiple Choice

-Which of the following is true of Exhibit 6-25?

• A) Points a, c, and e would all cost the same amount to purchase.
• B) Points a, b, and c all represent the same level of utility, which is higher than that represented by points d, e, and B
• C) Points a, c, and e all represent the same level of utility, which is lower than that represented by point B
• D) Points a, c, and e all represent the same level of utility, which is higher than that represented by point b.
• E) Point d represents a level of utility higher than any other point on the graph.

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Definitions:

Average Variable Cost

Calculated by dividing the total variable costs by the quantity of output produced; it shows the variable cost per unit of output.

Marginal Cost

The supplementary expenditure brought on by the creation of one more unit of a good or service.

Total Variable Cost

The sum of all variable expenses that are incurred in the direct production of goods or services.

AVC

Average Variable Cost, which is the variable cost per unit of output.