Asked by
Kriti Kumari
on Dec 08, 2024
Verified
Both Stan and Kyle own potato chip factories. Stan's factory has low fixed costs and high variable costs. Kyle's factory has high fixed costs and low variable costs. Currently, each factory is producing 5,000 bags of potato chips at the same total cost. Complete the following statement with the correct answer. If each produces
A) less, their costs will be equal.
B) more, their costs will be equal.
C) more, the costs of Kyle's factory will exceed those of Stan's factory.
D) less, the costs of Kyle's factory will exceed those of Stan's factory.
Fixed Costs
Costs that remain consistent regardless of production or sales volume, including rent, salaries, and insurance fees.
Variable Costs
Expenses that change in proportion to the activity or production level of a business.
- Familiarize yourself with the fundamental aspects of costs in economics, including total fixed costs (TFC), total variable costs (TVC), and total costs (TC).
- Analyze how changes in output affect costs (including fixed, variable, and marginal costs).
Verified Answer
YM
Learning Objectives
- Familiarize yourself with the fundamental aspects of costs in economics, including total fixed costs (TFC), total variable costs (TVC), and total costs (TC).
- Analyze how changes in output affect costs (including fixed, variable, and marginal costs).