If Output Decreases

question 106

Multiple Choice

If output decreases

• A) total fixed costs will remain the same.
• B) total variable costs will increase.
• C) per-unit fixed costs will decrease.
• D) All of these are correct.

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good or service versus what they actually receive, often due to market forces.

MC Curve

A graph representing the marginal cost of producing an additional unit of a good or service, usually upward sloping, reflecting increasing costs.

AVC Curve

The graphical representation of the average variable cost per unit of output over various levels of production.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good changes as production volume changes.