Figure 6A -Under the Free Disposal Assumption, an Output Maximizing Firm Using

question 35

Multiple Choice

Figure 6A

-Under the free disposal assumption, an output maximizing firm using Figure 6A would want to use:

• A)more than C units of z₁.
• B)less than A units of z₁.
• C)at least C units of z₁.
• D)between A and C units of z₁.

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Definitions:

Variable Cost

A cost that changes in proportion to the level of output or activity.

Fixed Cost

Fixed charges that stay the same no matter the production or sales volume, like rental costs, salary payments, and insurance rates.

Composition

The way in which different components or elements are organized or arranged.

Fixed Cost

Expenses that do not change in proportion to the level of goods or services produced by a business.