A Reference Point Is an Arbitrary Point Used to Evaluate

question 33

True/False

A reference point is an arbitrary point used to evaluate an alternative as either a gain or a loss.

---

Definitions:

Average Variable Cost

The total variable cost divided by the number of units produced, reflecting the variable cost of producing each unit.

Marginal Cost

The cost of producing one additional unit of a good or service, often considered in decision-making about production levels.

Marginal Revenue

The additional income earned from selling one more unit of a good or service; it's a crucial concept for decision-making in businesses.

Economic Profit

The total revenue of a business minus its explicit and implicit costs, representing the surplus remaining after accounting for all costs, including opportunity costs.