Harbor Manufacturing Is Trying to Predict the Cost Associated with Producing

question 112

Multiple Choice

Harbor Manufacturing is trying to predict the cost associated with producing its anchors.At a production level of 4,000 anchors,Harbor Manufacturing's average cost per anchor is $50.00.If $20,000 of the total costs are fixed,what is the variable cost of producing each anchor?

• A)$ 5
• B)$ 50
• C)$ 45
• D)$180,000

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Definitions:

Increasing Returns

A situation in which an increase in the scale of production results in a disproportionate increase in output, usually leading to lower average costs.

Suffer Losses

occurs when a business or individual incurs expenses that exceed their revenues.

Long-run

A period of time in economics during which all factors of production and costs are variable, allowing for full industry adjustment.

Long-run Equilibrium

A state in which all aspects of a market, including supply and demand, production costs, and economic resources, are balanced, allowing for consistent economic conditions over time.