If a Business Ignores Some of Its Fixed Costs as Irrelevant

question 133

Multiple Choice

If a business ignores some of its fixed costs as irrelevant to its production decision, this type of cost is termed:

• A)implicit costs
• B)spilt milk
• C)development costs
• D)sunk costs

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Definitions:

Consumer Surplus

The gap between the price consumers are ready to pay for a good or service and the price they actually pay.

Complements

Goods or services that are often used together, where the use or consumption of one enhances the use or consumption of the other.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service and the total amount actually paid.

Early Freeze

An event where temperatures drop to freezing levels earlier in the season than is typically expected.