The Highest Value of Total Cost Was $70,000 in June

question 267

Multiple Choice

The highest value of total cost was $70,000 in June for Acai Beverages,Inc.Its lowest value of total cost was $52,000 in December.The company makes a single product.The production volume in June and December were 13,000 and 7000 units,respectively.What is the variable cost per month? (Round your answer to the nearest cent.)

• A) $1.38 per unit
• B) $2.57 per unit
• C) $3.00 per unit
• D) $11.67 per unit

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Definitions:

Economic Profits

Economic profits are the financial gains that exceed the total costs of production, including both explicit and opportunity costs, indicating an above-normal return.

Average Fixed Cost

The fixed costs of production divided by the quantity of output produced; it decreases as production increases.

Short Run

A time period in economics during which at least one input, such as plant size, is fixed and cannot be changed.

Competitive Firm

A company that operates in a market with many sellers, where it has little to no control over the price of its product.