If an Activity Whose Normal Duration Is 15 Days Can

question 1

Multiple Choice

If an activity whose normal duration is 15 days can be shortened to 10 days for an added cost of $2,000, the crash cost per period is

• A) $400
• B) $2,000
• C) $10,000
• D) $20,000
• E) $30,000

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Definitions:

Long-Run Equilibrium

A state in an economy or market where, given the long-term flexibility of prices and adjustment of all input factors, supply equals demand and all firms earn normal profits.

Demand Curve

A graphical representation showing the relationship between the price of a good and the quantity demanded by consumers, typically downward sloping.

Average Total Cost

The total cost of production divided by the total output, representing the cost per unit of output.

Monopolistically Competitive

Describes a market structure where many firms sell products that are similar but not identical, leading to competition based on product differentiation.