Amy Spends $5,000 on Remodeling a Storefront That She Then

question 92

Multiple Choice

Amy spends $5,000 on remodeling a storefront that she then opens as a take-out deli. Business has not been very successful, and she needs an additional $1,000 to keep the deli open. Which of the following is true?

• A) The $5,000 Amy spent on remodeling represents a part of the total variable cost of her business.
• B) The $5,000 Amy spent is a fixed cost of her business.
• C) The $1,000 represents her marginal costs of production.
• D) The $1,000 Amy needs to keep the deli open represents her total fixed costs.

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Definitions:

Marginal Benefit

The additional satisfaction or utility derived by consuming or producing one more unit of a good or service.

Public Good

An item or service made available at no cost to everyone in society, delivered by public institutions, private organizations, or individuals without aiming for financial gain.

Marginal Cost

The cost of producing one additional unit of a good or service, a concept crucial for understanding economic decision-making and pricing strategies.

Positive Externalities

Benefits that result from a commercial activity experienced by others who are not directly involved in the transaction or activity.