Asked by
Angelle Guillard
on Oct 25, 2024
Verified
From Example 7.2, most pizza restaurants have large fixed costs and relatively low variable costs. What does this tell us about the average variable cost (AVC) of producing pizza?
A) AVC is relatively low.
B) AVC is relatively high.
C) AVC is high for low quantities but declines quickly.
D) AVC is increasing for all quantity levels.
Fixed Costs
Expenses that do not change with the level of goods or services produced by a business.
Variable Costs
Expenses that vary directly with the level of production or volume of output.
Average Variable Cost
The total variable cost divided by the quantity of output produced, showing how variable costs change with output levels.
- Interpret cost curves, including their shapes, shifts, and the relationships among them in both short and long runs.
Verified Answer
HW
Learning Objectives
- Interpret cost curves, including their shapes, shifts, and the relationships among them in both short and long runs.