Which of the Following Is Considered a Decision Variable in the Production

question 44

Multiple Choice

Which of the following is considered a decision variable in the production mix problem of maximizing profit?

• A)the amount of raw material to purchase for production
• B)the number of product types to offer
• C)the selling price of each product
• D)the amount of each product to produce

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Definitions:

Fixed Costs

Costs that do not change with the level of output produced by a firm, such as rent, salaries, and equipment costs.

Average Total Cost Curve

A graphical representation of the total cost per unit of output, calculated by dividing the total cost by the quantity of output produced.

Diminishing Marginal Returns

A principle stating that as more of a variable input is added to a fixed input, the additional output from each new unit of input will eventually decrease.

Average Total Cost Curve

A graphical representation showing the cost per unit of output when fixed and variable costs are summed up and divided by the total output.