When Output Is 20, Fixed Costs Are $100 and Variable

question 1

Multiple Choice

When output is 20, fixed costs are $100 and variable costs are $400. When output rises to 21, fixed costs are $100 and variable costs are $450. This implies that the marginal cost of the last unit of output equals:

• A) $25.
• B) $50.
• C) $500.
• D) $550.

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Definitions:

Power of the Test

The probability that a statistical test will correctly reject a false null hypothesis, or its ability to detect an effect when there is one.

True Value

The actual or real value of a parameter which is estimated in a study.

Sample Size

The number of individual observations or data points collected in a sample from a larger population.

ANOVA

A statistical method, short for Analysis of Variance, that assesses potential differences in means among multiple groups.