Answer the Following Questions Using the Information Below

question 174

Multiple Choice

Answer the following questions using the information below:
Braun's Brakes manufactures three different product lines, Model X, Model Y, and Model Z. Considerable market demand exists for all models. The following per unit data apply:

-If there is excess capacity, which model is the most profitable to produce?

• A)Model X
• B)Model Y
• C)Model Z
• D)Models X and Y

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Definitions:

Variable Costs

Expenses that vary directly with the level of production or volume of output.

Average Variable Cost

The total variable cost divided by the quantity of output produced, showing how variable costs change with output levels.

Cost Curves

Graphical representations of the costs associated with producing different quantities of goods, showing how costs change with changes in output.

Economic Cost

Cost to a firm of utilizing economic resources in production.