The Selling Price of a Widget Is $15 and the Fixed

question 95

Multiple Choice

The selling price of a widget is $15 and the fixed cost per month is $4,800. The variable cost per widget is $9. Calculate the contribution margin per unit.

• A) $24
• B) $9
• C) $8
• D) $6
• E) $5

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Definitions:

Marginal Cost Curve

A graph showing how the cost of producing one more unit of a good varies as the quantity of production increases.

Short Run

in economics, refers to a period during which at least one factor of production is fixed, and firms can adjust only the variable factors.

TVC

Total Variable Cost, which refers to all variable expenses that change with the level of output.

Short Run

A period of time in economics during which at least one input is fixed, limiting the ability of the economy or firm to adjust.