How Will Unit (Average) Cost of Manufacturing (Materials, Labor and Overhead)

question 53

Multiple Choice

How will unit (average) cost of manufacturing (materials, labor and overhead) usually change if the production level rises?

• A)It will remain constant.
• B)It will increase in direct proportion to the production increase.
• C)It will increase, but inversely with the production increase.
• D)It will decrease inversely and in direct proportion to the production increases.
• E)It will decrease, but not in direct proportion to the production increase.

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Definitions:

Overallocated

A situation where resources are disproportionately distributed or excessively committed to a particular project or area, potentially leading to inefficiencies.

Production

Production is the process of creating goods or services through the combination of labor, materials, and technology to meet consumer demand.

Marginal Social Cost

The cost to society of producing one additional unit of a good, including both the cost to the producer and any costs to others from that production.

Marginal Social Benefit

The additional benefit to society resulting from the production or consumption of one more unit of a good or service.