If the Level of Activity Increases Within the Relevant Range

question 165

Multiple Choice

If the level of activity increases within the relevant range:

• A)variable cost per unit and total fixed costs also increase.
• B)fixed cost per unit and total variable cost also increase.
• C)total cost will increase and fixed cost per unit will decrease.
• D)variable cost per unit and total cost also increase.

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Definitions:

Dictator Game

A mutually anonymous behavioral economics game in which one person (“the dictator”) unilaterally determines how to split an amount of money with the second player.

Ultimatum Game

A behavioral economics game in which a mutually anonymous pair of players interact to determine how an amount of money is to be split. The first player suggests a division. The second player either accepts that proposal (in which case the split is made accordingly) or rejects it (in which case neither player gets anything).

Neoclassical Economics

A method in economics that concentrates on how supply and demand determine the distribution of goods, outputs, and incomes within various markets.

Behavioral Economics

A field of economic research that analyzes how psychological, social, cognitive, and emotional factors affect economic decisions of individuals and institutions.