Exhibit 11-8 the Table Below Shows How Total Cost Varies

question 60

Multiple Choice

Exhibit 11-8 The table below shows how total cost varies with output in a factory producing watches:
Refer to Exhibit 11-8.If the output equals five watches per week,the average fixed cost and average variable cost of production equal ____ and ____,respectively.

• A) $9; $10
• B) $10; $9
• C) $45; $50
• D) $50; $45

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Definitions:

Inflation

Inflation denotes the rate at which the general level of prices for goods and services is rising, and subsequently, purchasing power is falling.

Capacity Utilization

A measure of how effectively an entity uses its production capacity to produce goods, expressed as a percentage of total potential output.

Cyclical Industry

An industry highly sensitive to the economic cycle, experiencing rapid growth in booming economies and significant declines during recessions.

Automobile Industry

The automobile industry encompasses the wide range of companies and activities involved in the design, manufacturing, marketing, and selling of motor vehicles.