Refer to the Following

question 20

Multiple Choice

Refer to the following:

A firm produces 4,000 units of output using 500 workers. Marginal cost is $10, the wage rate is $160, and total fixed cost is $100,000.

-What output is 4,000 units,

• A) average variable cost is decreasing.
• B) average variable cost is increasing.
• C) average total cost is decreasing.
• D) average total cost is increasing.
• E) both a and c

---

Definitions:

Contractual Capacity

The legal ability of a person to enter into a binding contract.

Form a Contract

The process of creating a legally binding agreement between two or more parties.

Consideration

The benefit which is bargained for between the parties and is the essential reason for a party entering into a contract.

Bargained-For Exchange

A fundamental principle in contract law where both parties must exchange something of value for a contract to be considered valid and enforceable.