If the Average Cost of Producing 10 Sweaters Is $6

question 80

Multiple Choice

If the average cost of producing 10 sweaters is $6.50 and the marginal cost of producing the tenth sweater is $6.75, the average cost of producing 10 sweaters will be:

• A) $6.50.
• B) more than $6.50.
• C) less than $6.50.
• D) exactly $6.75.

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Definitions:

Elastic

Describes a situation in which the supply or demand for a good or service is highly responsive to changes in price.

Long Run

A period in economic analysis where all factors of production and costs are variable, allowing for full adjustment to changes in the market or economy.

Short Run

A period in economic theory during which at least one factor of production is fixed, limiting the capacity to adjust to changes in market demand.

Elastic

Describes a situation where the quantity demanded or supplied of a good is sensitive to changes in price.