Unlike Physical Products, Services Cannot Be Seen, Tasted, Felt, Heard

question 3

Multiple Choice

Unlike physical products, services cannot be seen, tasted, felt, heard, or smelled before they are bought. This characteristic of services is known as ________.

• A) inseparability
• B) intangibility
• C) variability
• D) perishability
• E) heterogeneity

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Definitions:

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, illustrating how fixed costs per unit change with output levels.

MC

Marginal Cost, the cost of producing one additional unit of a good.

ATC

Average Total Cost, which is the total cost of production divided by the quantity of output produced.

AVC

Average Variable Cost; the per unit variable cost associated with producing a good or service.