Question

1) The average total cost of producing shoes will __________ as businesses increase production

a

always increase

b

always decreases

c

eventually increase

2)If the average variable cost of producing 4 jeans at Jerry’s factory is $60, and the fixed cost of the factory per hour is $200, what is the total cost when 4 jeans are produced?

a

$60

b

$240

c

$260

d

$440

Answer 1

1

If we talk in simple terms then average total cost is the sum of average fixed cost and average variable cost

its shape is U shaped because initially it decreases as production decreases then it increases as a production increases more

so we cannot say completely that it always increases or decreases

the answer will be it will be eventually increase

the correct answer is option C

2