As a Business Adds Products to Its Product Line That

question 20

Multiple Choice

As a business adds products to its product line that have the same purchased materials and similar manufacturing processes,it is able to lower the average unit cost of all products,producing a ________ effect.

• A)network
• B)scope
• C)Mohring
• D)scale
• E)cluster

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Definitions:

ATC

The average total cost is defined as the total production cost divided by the quantity of produced output.

AVC

Average Variable Cost, which is the cost of labor, materials, or overhead that changes according to the level of production output.

MC

Marginal cost, the increase in total cost that arises from an extra unit of production, important for decision-making in production and pricing.

ATC

Average Total Cost; the total cost of production (fixed plus variable costs) divided by the total quantity of output produced, representing the average cost per unit of output.