Table 4-3 -Refer to Table 4-3.The Table Above Lists the Marginal Cost

question 184

Multiple Choice

Table 4-3

-Refer to Table 4-3.The table above lists the marginal cost of cowboy hats by The Waco Kid, a firm that specializes in producing western wear.If the market price of cowboy hats is $50, how many hats will be produced?

• A)0
• B)1
• C)2

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Definitions:

Returns to Scale

The change in output resulting from a proportionate increase in all inputs; the concept explains how output changes with varying levels of input.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, typically resulting in lower per-unit costs with increased production.

Average Cost Curve

The average cost curve is a graphical representation showing how the average cost per unit of output varies with the level of output, typically U-shaped due to economies and diseconomies of scale.

Economies of Scale

Cost benefits that companies achieve because of their large scale of operations, generally resulting in a lower cost per output unit as the scale increases.