Suppose Chris Is a Potter Who Makes Mugs If Chris's Fixed Costs Decrease, Then in the Short Run

question 137

Multiple Choice

Suppose Chris is a potter who makes mugs. His total costs depend on the number of mugs he makes each day, as shown in the accompanying table. $$\begin{array} { | c | c | } \hline \text { Number d Mugs Per Day } & \text { Tatal Cast Per Day } \\\hline 0 & \$ 10 \\\hline 1 & \$ 14 \\\hline 2 & \$ 19 \\\hline 3 & \$ 25 \\\hline 4 & \$ 32 \\\hline 5 & \$ 40 \\\hline 6 & \$ 49 \\\hline\end{array}$$  
If Chris's fixed costs decrease, then in the short run, his profit-maximizing level of output will:

• A)not change.
• B)increase.
• C)decrease.
• D)only increase if he can earn a positive profit.

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Definitions:

Hypothesis Test

A statistical method used to determine if there is enough evidence in a sample of data to infer that a certain condition holds true for the entire population.

Reject

In statistical analysis, to refuse the null hypothesis based on the evidence provided by the test statistic.

Type I Error

The error made when a true null hypothesis is incorrectly rejected.

Correct Decision

An accurate conclusion or choice made based on statistical analysis or reasoning.