William Smith Works for an Automobile Company That Generates an Annual

question 10

Multiple Choice

William Smith works for an automobile company that generates an annual revenue exceeding $200 million,but accounts for less than one percent of the global automobile market.Based on this information,the company that William works for would be considered a

• A) Conglomerate
• B) Corporation
• C) Small business
• D) Franchise

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Definitions:

Average Fixed Cost

Average Fixed Cost refers to the total fixed costs (costs that do not change with the level of output) divided by the quantity of output produced. It decreases as production increases.

Total Variable Cost

The total of expenses that vary directly with the level of production, such as raw materials and direct labor.

Marginal Product

The additional output resulting from the use of one more unit of a production input, keeping other inputs constant.

AVC

Average Variable Cost, which is the total variable costs divided by the quantity of output produced.