Production Costs for a Given Output Will Be Minimized When

question 123

Multiple Choice

Production costs for a given output will be minimized when the

• A)budget line and the product indifference curve meet in the vertical axis.
• B)budget line crosses the product indifference curve.
• C)budget line begins to bend back on itself.
• D)product indifference curve and the budget line are tangent.

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Definitions:

Marginal Returns

The change in output resulting from a one-unit increase in a particular input, while holding other inputs constant.

Marginal Cost

The rise in overall expenses associated with the production of an extra unit of a product or service.

Average Total Cost

The total cost of production divided by the number of units produced, giving a per unit cost of production.

Marginal Cost

The expense associated with creating an extra unit of a product or service.