When Choosing the Production Level for Tomorrow You Find That

question 29

Multiple Choice

When choosing the production level for tomorrow you find that at an output of 100 units, the total variable costs are $20,000 and the average fixed cost is only $50. If the market price is $200, you should:

• A) b or e.
• B) shut down.
• C) produce more than 100 units.
• D) produce fewer than 100 units.
• E) produce where MC = MR.

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Definitions:

Credit Sale

A sales transaction in which the amount due is not paid at the time of sale but is promised to be paid in the future by the purchaser.

Accounts Receivable

Money owed to a business by its clients or customers for goods or services delivered or used but not yet paid for.

Accrued Interest

The interest that has been earned but not yet paid, accumulating on loans, bonds, or any other financial instruments over a period of time.

Notes Receivable

Financial assets representing amounts owed to a company by debtors, typically evidenced by formal instruments with specified payment terms.