The Trade-Offs That Are Made Because of Scarcity

question 95

Multiple Choice

The trade-offs that are made because of scarcity

• A) are important in developing economies,but they do not apply to developed economies.
• B) are important in developed economies,but they do not apply to developing economies.
• C) are different when they involve the wants of people,but they are similar when they involve the needs of people.
• D) can be accurately made to the extent that they can be quantified.
• E) depend on the decision maker's value judgments about the relative importance of the alternatives.

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Definitions:

Average Total Cost

The total cost of production divided by the quantity of output, encompassing both fixed and variable costs.

Average Variable Cost

The cost per unit of production that varies with the level of output, calculated by dividing the total variable costs by the number of units produced.

Variable Costs

Expenses that change in proportion to the activity of a business, such as costs for raw materials or production inputs.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.