Describe what fixed costs and marginal costs mean to a company. Choose the correct answer below. A. The number of units at which revenue just equals cost is the fixed cost. Marginal cost is the constant for a particular product and does not change as more items are made. B. Fixed cost is the constant for a particular product and does not change as more items are made. Marginal cost is the rate of change of cost C (x) at the level of production x and is equal to the slope of the cost function at x. C. Fixed cost is the rate of change of cost C (x) at the level of production x and is equal to the slope of the cost function at x. Marginal cost is the constant for a particular product and does not change as more items are made. D. Fixed cost is the constant for a particular product and does not change as more items are made. The number of units at which revenue just equals cost is the marginal cost.

Question

Dominguez

Business

5 February, 02:48

Describe what fixed costs and marginal costs mean to a company. Choose the correct answer below. A. The number of units at which revenue just equals cost is the fixed cost. Marginal cost is the constant for a particular product and does not change as more items are made. B. Fixed cost is the constant for a particular product and does not change as more items are made. Marginal cost is the rate of change of cost C (x) at the level of production x and is equal to the slope of the cost function at x. C. Fixed cost is the rate of change of cost C (x) at the level of production x and is equal to the slope of the cost function at x. Marginal cost is the constant for a particular product and does not change as more items are made. D. Fixed cost is the constant for a particular product and does not change as more items are made. The number of units at which revenue just equals cost is the marginal cost.

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June Hubbard · Answer 1

B) Fixed cost is the constant for a particular product and does not change as more items are made. Marginal cost is the rate of change of cost C (x) at the level of production x and is equal to the slope of the cost function at x.

Explanation:

Fixed costs do not change when the quantity of goods or services produced changes, that is why they are fixed (they do not move).

While marginal costs are the costs associated to producing one extra unit of output. They change as the total output changes.

Profit maximizing firms should increase their output level until the marginal cost equals the marginal revenue (revenue generated by selling one additional unit of output).