When Hector Ordered the Model Fighter Jet for $22 from a Hobby

question 34

Multiple Choice

When Hector ordered the model fighter jet for $22 from a hobby catalog,he was horrified to find that he was charged almost $19 for shipping charges.He swore never to buy anything from that catalog again.Due to a _____ gap,the catalog lost a customer.

• A)standards
• B)communications
• C)performance
• D)knowledge
• E)research

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Definitions:

AVC

Average Variable Cost, which is the cost of labor, materials, or overhead that changes according to the level of production output.

MC

Marginal cost, the increase in total cost that arises from an extra unit of production, important for decision-making in production and pricing.

ATC

Average Total Cost; the total cost of production (fixed plus variable costs) divided by the total quantity of output produced, representing the average cost per unit of output.

AVC

Average Variable Cost, the cost a company incurs to produce one additional unit of product, excluding fixed costs.