Graph 2-3 -Refer to Graph 2-3.On the Production Possibilities Frontier Shown, at Frontier

question 108

Multiple Choice

Graph 2-3
-Refer to Graph 2-3.On the production possibilities frontier shown, at which point or points is the economy efficient?

• A)A, B, C
• B)A, C, F
• C)E

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Definitions:

AVC

Average Variable Cost, which represents the variable costs of production (costs that change with output) divided by the quantity of output.

Average Total Cost

Calculated as the sum of all production costs divided by the number of units produced, representing the per unit cost of production.

Average Variable Cost

The sum of all costs that vary with output levels, divided by the total output generated.

Economies of Scale

The cost advantage that arises with increased output of a product, as the fixed costs are spread over more units of production.