Which of the Following Statements Is False Regarding Upstream and Downstream

question 55

Multiple Choice

Which of the following statements is false regarding upstream and downstream costs?

• A) Both upstream and downstream costs are unnecessary and should be minimized, if not eliminated.
• B) Upstream costs occur before and downstream costs occur after goods are manufactured.
• C) Product design is an example of an upstream cost.
• D) Customer service is an example of a downstream cost.

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Definitions:

Average Total Cost

The total cost of production (fixed and variable) divided by the number of units produced, representing the per unit cost of production.

Marginal Cost

The cost of producing one more unit of a good or service.

Optimum Efficiency

The most favorable condition for the maximal performance and least waste of resources.

Marginal Revenue

The financial gain achieved through the sale of one more unit of a good or service.