If the 15th Unit of Output Has a Marginal Cost

question 292

Multiple Choice

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

• A)Average cost increases as more is produced.
• B)Average cost will fall.
• C)Average cost could increase or decrease depending on what happens to variable cost.
• D)Average cost could increase or decrease depending on what happens to fixed cost.

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Definitions:

Major Repairs

Significant restorations or overhauls to property or equipment, intended to extend its useful life or enhance its value.

Ordinary Repair

Maintenance activities conducted regularly to keep assets in their current condition and prevent significant deterioration.

Taxable Estate

The total value of an individual’s estate that is subject to estate tax after deductions such as debts, funeral expenses, and charitable donations.

Administrative Expenses

Expenses that are not directly tied to the production of goods or services, such as salaries of administrative personnel, rent, and utilities.