The Table Shows Costs for an Individual Firm

question 95

Multiple Choice

The table shows costs for an individual firm. At the fifth unit produced:

• A)marginal cost is greater than average total cost.
• B)marginal cost is increasing.
• C)variable cost is decreasing.
• D)None of these are correct.

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Definitions:

Total Variable Cost Curve

A graph that shows the relationship between total variable cost and the level of a firm’s output.

Factor Prices

The prices of the inputs used in the production process, such as labor, capital, and land.

Output

The total amount of goods and services produced by a business, industry, or economy.

Total Variable Costs

The sum of expenses that vary with production volume, including costs for raw materials, labor, and utilities directly involved in the production process.