The Table Below Shows Output,marginal Cost,and Average Variable Cost for the Production

question 98

Multiple Choice

The table below shows output,marginal cost,and average variable cost for the production of pairs of shoes.All costs are in dollars.
TABLE 7-6
-Refer to Table 7-6.Suppose this firm is producing 210 pairs of shoes per time period and that the variable factor of production is labour.Which of the following statements best describes this firm's production?

• A)Additional units of labour employed will increase the average variable cost of producing shoes.
• B)Marginal cost is higher than average variable cost,so average product must be rising.
• C)Marginal cost is higher than average variable cost,so marginal product must be rising.
• D)Each additional unit of labour employed reduces the average variable cost of the pairs of shoes.
• E)The firm is producing below its capacity.

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Definitions:

Absolute Advantage

A concept in international trade theory that occurs when a country can produce a good more efficiently and at a lower cost than another country.

Domestic Advantage

The competitive edge a company gains by operating within its home country, benefiting from familiar market conditions and regulations.

Comparative Advantage

The ability of a country, individual, company, or region to produce a good or service at a lower opportunity cost than its competitors.