If the Long-Run Average Cost of Producing 50 Units of Good

question 115

Multiple Choice

If the long-run average cost of producing 50 units of Good X is $3.00 and the long run average cost of producing 51 units of Good X is $3.25, the firm is

• A) experiencing economies of scale in the range of 50 to 51.
• B) experiencing constant returns to scale in the range of 50 to 51.
• C) experiencing diseconomies of scale in the range of 50 to 51.
• D) operating at the minimum efficient scale.

---

Definitions:

Process Costing

An accounting methodology used for homogenous products, where costs are assigned to production processes or departments and averaged over the units produced.

Cost per Unit

The cost to produce a single unit of product, calculated by dividing the total production cost by the number of units produced.

Total Manufacturing Cost

The aggregate expenses involved in making a product, including raw materials, direct labor, and overhead costs.

Job Costing System

An accounting method used to track costs and profitability of individual jobs or projects, allowing for precise control and reporting of expenses.