Your Friend Notices That U

question 138

Multiple Choice

Your friend notices that U.S.auto production and U.S.population growth have moved together over several decades.He reasons that one way to slow population growth is for the government to order the auto makers to cut back on production.You gently point out to him that he:

• A)would be correct only when the economy was in a recession.
• B)has committed the fallacy that association is causation.
• C)has ignored the secondary effects.
• D)has committed the fallacy of composition.
• E)would be correct only when the United States enjoyed economic growth.

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Definitions:

Total Variable Cost

The total of expenses that vary directly with the level of production, such as raw materials and direct labor.

Marginal Product

The additional output resulting from the use of one more unit of a production input, keeping other inputs constant.

AVC

Average Variable Cost, which is the total variable costs divided by the quantity of output produced.

ATC

A restated definition for Average Total Cost; it implies the cost per unit produced when both fixed and variable costs are accounted for across all levels of output.