As a Firm Expands Its Output, Cost Per Unit of Output

question 117

Multiple Choice

As a firm expands its output, cost per unit of output average cost) decreases and then increases. Average cost and output have

• A) a relationship with a maximum.
• B) no relationship.
• C) a relationship with a minimum.
• D) a linear positive relationship.

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Definitions:

Belief Perseverance

The phenomenon where individuals maintain their beliefs even in the face of contradictory evidence.

Fundamental Attribution Error

The tendency to overemphasize personal characteristics and ignore situational factors in explaining others' behavior.

Overjustification Effect

A phenomenon where providing external incentives for an activity already intrinsically rewarding leads to a decrease in intrinsic motivation.

Contingent Reward

A reinforcement strategy where rewards are given based on the achievement of specific criteria or performance.