Cost of Production The Following Questions Refer to the Diagram Below. the Wage

question 10

Multiple Choice

Cost of Production

The following questions refer to the diagram below. The wage rate is assumed to be $12 per hour, the rental rate is assumed to be $6 per hour, and capital is assumed to be fixed in the short run at 10 hours.



-Refer to Cost of Production.The short-run average cost of producing 50 units of output per week is

• A) $3 per unit.
• B) $3.60 per unit.
• C) $5 per unit.
• D) $2.77 per unit.

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Definitions:

Penetration Pricing

Setting the price of a new product lower than expected to gain fast market share.

Development Costs

Development costs are expenses associated with the creation and design of new products or services, including research and development.

Breakeven Point

The level of production or sales at which total costs equal total revenue, meaning no net loss or gain is incurred.

Fixed Costs

Costs that do not change with the number of sales made.