If a Company's Total Costs Per Day Increase from $500

question 96

True/False

If a company's total costs per day increase from $500 to $600 by adding another worker,but its additional benefits are $150,it is sensible to add that additional worker.

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Definitions:

Learning Curve

Graph relating amount of inputs needed by a firm to produce each unit of output to its cumulative output.

Average Costs

The total cost of production divided by the quantity produced, indicating the cost per unit of product or service.

Tolerances

The permitted variations in measurements or physical characteristics in the manufacturing or production of goods.

Economies of Scale

Economies of scale describe the reduction in per-unit cost that a company benefits from as it scales up production. This cost benefit is due to the fixed costs spreading over a larger number of units.