The Clauson Company Has Total Fixed Costs of $400,000

question 80

Multiple Choice

The Clauson Company has total fixed costs of $400,000.They also have $120,000 in total variable costs.These costs exist at a production level of 80,000 units.The fixed cost per unit is:

• A)$6.50.
• B)$1.50.
• C)$5.00.
• D)$3.50.

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Definitions:

Income Effect

The influence of income adjustments on the demand for goods or services, whether in an individual's finances or within an economy.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading to consumers replacing more expensive items with less costly alternatives.

Diminishing Marginal Utility

The principle that as more of a good or service is consumed, the additional satisfaction or utility gained from consuming an additional unit declines.

Total Utility

The total satisfaction or benefit received by consuming a given total quantity of a good or service.