The Following Production and Average Cost Data for Two Levels

question 85

Multiple Choice

The following production and average cost data for two levels of monthly production volume have been supplied by a company that produces a single product: The best estimate of the total cost to manufacture 1,200 units is closest to:

• A)$68,520
• B)$100,920
• C)$111,720
• D)$90,120

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Definitions:

Optimal Consumption Rule

A principle in economics that determines the best combination of goods and services that maximizes the utility of a consumer given their budget constraints.

Marginal Utility

The additional satisfaction or benefit gained from consuming one more unit of a good or service.

Consumption Bundle

A combination of goods and services that a consumer chooses to consume at a given time.

Budget Constraint

The limit on the consumption patterns of an individual or household based on their income and the prices of goods and services.