Dizzy Amusement Park Is Open from 8:00 Am Till Midnight

question 177

Multiple Choice

Dizzy Amusement Park is open from 8:00 am till midnight every day of the year. Dizzy charges its patrons a daily entrance fee of $30 per person which gives them unlimited access to all of the park's 35 rides.For liability insurance, Dizzy pays a set monthly fee plus a small additional amount for every patron entering the park. The cost of liability insurance would best be described as a:

• A) fixed cost
• B) mixed cost
• C) step-variable cost
• D) true variable cost

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Definitions:

Cost-output Elasticity

Cost-output elasticity measures the responsiveness of the cost of producing a good to a change in the output level, indicating how costs change as production scales.

Marginal Cost

The increase in expenditure resulting from the production of an additional unit of a good or service.

Short-run Cost Function

The relationship between the cost of production and the level of output when at least one input is fixed in the short term.

Long-run Cost Function

A relationship that shows the lowest possible cost at which a firm can produce any given level of output when all inputs, including capital, are variable.