If the Average Total Cost of Producing 20 Sweaters an Hour

question 392

Multiple Choice

If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the

• A) short-run average total cost curve shifts upward because all inputs have increased.
• B) firm moves along its short-run average total cost curve.
• C) firm experiences economies of scale.
• D) long-run average cost curve shifts downward.

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Definitions:

Direct Labor-Hour

A measure of the amount of time workers spend directly working on manufacturing a product or providing a service.

Labor Rate

The cost per hour that a company pays for labor, often used in calculating the total labor cost of a project or production.

Selling and Administrative Expense Budget

outlines predicted selling expenses and administrative costs for a future period.

Fixed Expenses

Costs that do not change with the level of production or sales activities, such as rent or salaries.