You Observe That at Your Current Production of Lunch Boxes

question 38

Multiple Choice

You observe that at your current production of lunch boxes, the average total cost of producing lunch boxes is $5 and the marginal cost of producing lunch boxes is $2. What should always happen if you increase lunch box production?

• A) Marginal cost will rise.
• B) Marginal cost will fall.
• C) Average total cost will rise.
• D) Average total cost will fall.

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Definitions:

Customers Served

The number of individual clients or consumer accounts that a business has provided with goods or services.

Capital Costs

Expenses incurred in acquiring or upgrading physical assets such as buildings and machinery.

Labor-Intensive

Describing a process or industry that requires a large amount of labor to produce its goods or services.

Marginal Product

The additional output generated by employing one more unit of a specific input, while holding other inputs constant.