Table 24-5 The Table Below Pertains to Wrexington, an Economy in Which

question 126

Multiple Choice

Table 24-5
The table below pertains to Wrexington, an economy in which the typical consumer's basket consists of 20 pounds of meat and 10 toys.
-Refer to Table 24-5. The cost of the basket

• A)decreased by $2 from 2004 to 2005.
• B)increased by $3 from 2004 to 2005.
• C)increased by $7 from 2004 to 2005.
• D)increased by $10 from 2004 to 2005.

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Definitions:

Variable Cost

Costs that change in proportion to the level of production or sales, such as materials and labor directly involved in manufacturing.

Marginal Cost

The increase in cost resulting from the production of one additional unit of a good or service.

Fixed Input

An input whose quantity is constant and cannot be changed in the short run.

Short Run

A period in economics during which some factors of production are fixed, limiting the ability of a business to fully adjust to market changes.