Figure 7-2 -Al's Donuts Produces About 600 Dozen Doughnuts Daily.If Flour Prices

question 73

Multiple Choice

Figure 7-2
-Al's Donuts produces about 600 dozen doughnuts daily.If flour prices increase 20 percent,

• A)only marginal cost will shift up.
• B)only marginal cost and average total cost will shift up.
• C)marginal cost, average variable cost, and average total cost will shift up.
• D)marginal cost, average total cost, average variable cost, and average fixed cost will shift up.

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Definitions:

Public Choice Theory

Public Choice Theory is an economic framework that applies the principles and methods of economics to the analysis of political behavior, focusing on how public decisions are made.

Special-Interest Effect

The impact of a small, concentrated interest group on policy-making, often at the expense of broader public interest.

Principal-Agent Problem

A dilemma in economics where one party (the agent) is expected to act in the best interest of another (the principal) but may not do so due to conflicting interests.