Under an Average-Cost Pricing Policy,a Local Water Company Will Face

question 14

Multiple Choice

Under an average-cost pricing policy,a local water company will face the following:

• A)the local water company chooses the price at which short-run average cost curve intersects the average.
• B)the local water company chooses the price at which long-run average cost curve intersects the average.
• C)the government chooses the price at which the demand curve intersects the short-run marginal-cost curve
• D)the government chooses the price at which the demand curve intersects the long-run average-cost curve.

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Definitions:

Manufacturing Overhead Cost

Indirect costs related to manufacturing that are not directly tied to a specific product, including utilities and maintenance of equipment.

Overhead Cost

Represents the expenses not directly tied to the production of goods or services, including rent, utilities, and administrative costs.

Direct Labor Cost

The cost of wages and benefits for employees who are directly involved in manufacturing a product or delivering a service.

Manufacturing Overhead

All indirect costs associated with the production process, excluding direct materials and direct labor costs.