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Explain Why Every Decision Requires Some Sort of Trade-Off

question 135

Essay

Explain why every decision requires some sort of trade-off.


Definitions:

Average Variable Cost

Calculated by dividing the total variable costs by the quantity of output produced; it shows the variable cost per unit of output.

Marginal Cost

The supplementary expenditure brought on by the creation of one more unit of a good or service.

Total Variable Cost

The sum of all variable expenses that are incurred in the direct production of goods or services.

AVC

Average Variable Cost, which is the variable cost per unit of output.

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