If Fixed Costs Are $40,000 and Total Costs Are $200,000

question 77

Multiple Choice

If fixed costs are $40,000 and total costs are $200,000 at an activity level of 8,000 units, variable costs are approximately:

• A) $5 per unit
• B) $20 per unit
• C) $25 per unit
• D) $40 per unit

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Definitions:

Workers

Individuals engaged in any form of economic activity or employment, contributing labor for the production of goods and services.

Marginal Product

The additional output that can be produced by adding one more unit of a specific input, keeping all other inputs constant.

Total Product

The total quantity of output produced by a firm or economy with a given amount of inputs.

Diminishing Returns

An economic principle stating that if one factor of production is increased while others remain constant, the overall returns will eventually decrease after a certain point.