Use the Following Information for Questions 40-42

question 13

Multiple Choice

Use the following information for questions 40-42.
Melman Microscopes Inc. offers a two-year warranty against failure of its products. The estimated liability is 1.5% in the year of sale and 3% in the second year. Sales and actual warranty expense for 2016 and 2017 were:
-The warranty expense for 2017 was

• A) $157,500.
• B) $175,500.
• C) $195,000.
• D) $305,000.

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Definitions:

Long-Run Minimum Cost

The lowest cost at which a firm can produce any given level of output in the long run when all inputs are variable.

Average Total Cost Curve

A graphical representation of the total cost (fixed plus variable) per unit of output produced, plotted against different levels of output.

Short-Run

A period in which at least one factor of production is fixed, and firms can only partially adjust their output levels.

Long-Run Minimum Cost

The lowest cost at which a firm can produce any given level of output in the long run, when all inputs can be varied.