Figure 13-17 -Refer to Figure 13-17.Suppose the Firm Is Currently Producing Qf

question 17

Multiple Choice

Figure 13-17

-Refer to Figure 13-17.Suppose the firm is currently producing Qf units.What happens if it increases its output to Qg units?

• A)Its average cost of production will fall and its profit will rise.
• B)It will be taking advantage of economies of scale and will be able to lower the price of its product.
• C)It will move from a zero profit situation to a profit situation.
• D)It will move from a zero profit situation to a loss situation.

---

Definitions:

Marginal Cost

The extra expense resulting from the production of a single additional product or service unit.

Fixed Cost

Fixed costs are business expenses that remain unchanged regardless of the level of production or sales, such as rent, salaries, and insurance premiums.

Output

The cumulative sum of products and services generated by an economy.

Average Fixed Cost

The set expenses associated with production (not influenced by production scale) distributed over the number of items produced.