Why Does Household Production Still Exist

question 39

Multiple Choice

Why does household production still exist?  

• A) because for some households the opportunity cost of production at home is greater than the cost of purchasing the good in the market 
• B) because for some households the opportunity cost of production at home is less than the cost of purchasing the good in the market 
• C) because for some households the value of home production exceeds the sunk cost of home production 
• D) because for some households the value of home production is less than the variable cost of home production

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Definitions:

Average Total Cost

The sum of all production expenses (both constant and fluctuating) divided by the overall output quantity.

Perfect Competition

A market structure characterized by a large number of small firms, similar products, and free entry and exit, leading to price takers.

Perfect Competitor

A theoretical market structure where many firms sell identical products, no single firm can influence the market price, and all possess perfect market information.

Average Costs

The total cost of production divided by the number of goods produced, often used to assess cost efficiency.