Which of the Following Terms Refers to the Unit Cost

question 31

Multiple Choice

Which of the following terms refers to the unit cost reductions associated with large sized outputs?

• A) Absolute advantage of production
• B) Economies of scale
• C) Constant marginal returns
• D) Diminishing marginal returns

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Definitions:

Trade-Off

The concept of giving up one benefit or advantage in order to gain another regarded as more favorable.

Opportunity Cost

The cost of forgoing the next best alternative when making a decision, reflecting the potential benefits one misses out on when choosing one option over another.

Bowed Outward

Describes a curve on a graph, typically a production possibility frontier, indicating increasing opportunity costs when shifting resources between two goods.

Opportunity Cost

The cost of choosing one option over another, typically the best alternative forgone as a result of making a decision.