If Fixed Costs Are $1,000 and Variable Costs Are Constant

question 83

Multiple Choice

If fixed costs are $1,000 and variable costs are constant at $1.00 per unit over the relevant range of output,what will the average total cost be when 2,000 units are produced?

• A)$0.50
• B)$1.00
• C)$1.50
• D)$2.00

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Definitions:

Vertical Integration

An approach where a business grows by integrating various stages of its supply chain, including instances where a producer owns both its supplier and distributor.

Economies of Scale

Cost advantages that enterprises obtain due to scale of operation, with cost per unit of output generally decreasing with increasing scale.

Operating Efficiencies

A measure of how well a company utilizes its resources to produce goods and services, often reflecting in the reduction of costs and improvement in output.

Poison Pill

A strategy employed by companies to prevent or discourage hostile takeovers by making the company less attractive to the would-be acquirer.