Regarding a Producer's Cost Structure

question 149

Multiple Choice

Regarding a producer's cost structure:

• A) marginal cost begins to rise at a lower level of output than average cost.
• B) total fixed costs increase continuously as more units are produced.
• C) average cost is the extra cost of producing one more unit.
• D) average costs usually drop for awhile and then start to rise when the economies of scale "run out."
• E) Both A and D are true.

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Definitions:

Sufficient Time

Proper or adequate amount of time needed to complete a task or process.

Grinding Machine

A machine tool that uses an abrasive wheel as a cutting tool to shape or finish metals or other materials.

Existing Capacity

The maximum output that a facility can produce under normal working conditions within a given period.

Milling Machines

Mechanical tools or devices used for shaping and machining solid materials through cutting or grinding.