Use the Following Table to Answer Questions A-C

question 65

Essay

Use the following table to answer questions a-c.
a. What is the average fixed cost of producing 4 units of output?
b. What is the marginal cost of producing the third unit of output?
c. At what level of output does the firm encounter diminishing marginal returns? How do you know?

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Definitions:

Business Activities

Fundamental actions taken by a company to run its operations, including investing, financing, and operating activities.

Indirect Materials

Materials used in the production process that cannot be directly linked to a specific product, such as lubricants and cleaning supplies.

Factory Overhead

All indirect costs related to manufacturing, excluding direct materials and direct labor, like utilities, depreciation, and maintenance expenses.

Product Units

Refers to the individual items or quantities of a product that are produced or available for purchase.