In the figure, the intersection of curves A and B is the point at which 20 16 20 40 60 80 Quantily (unts per day) O A. average total cost is minimized. OB. average variable cost is minimized. O C. average fixed cost is minimized. OD. total product is maximized. 8, 12 4. Costs per unit (dollars per unit)

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
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**Figure Explanation:**

The graph illustrates four different cost curves labeled A, B, C, and D. The x-axis represents "Quantity (units per day)," ranging from 0 to 80, and the y-axis represents "Cost per unit (dollars per unit)," ranging from 0 to 20.

- **Curve A**: Downward sloping, indicating decreasing costs with increased quantity and intersects with curve B at a certain point.
- **Curve B**: U-shaped, representing typical cost behavior as quantity increases, intersecting with curves A and C.
- **Curve C**: Appears to be upward sloping, increasing as quantity increases, overlapping slightly with curve B.
- **Curve D**: Downward sloping, below the other curves, suggesting decreasing costs with increased quantity.

The intersection of curves A and B indicates a critical point of cost analysis.

**Question:**
In the figure, the intersection of curves A and B is the point at which:

- A. average total cost is minimized.
- B. average variable cost is minimized.
- C. average fixed cost is minimized.
- D. total product is maximized.

This educational question prompts analysis of cost behaviors and optimization of production costs based on the interaction of these curves.
Transcribed Image Text:**Figure Explanation:** The graph illustrates four different cost curves labeled A, B, C, and D. The x-axis represents "Quantity (units per day)," ranging from 0 to 80, and the y-axis represents "Cost per unit (dollars per unit)," ranging from 0 to 20. - **Curve A**: Downward sloping, indicating decreasing costs with increased quantity and intersects with curve B at a certain point. - **Curve B**: U-shaped, representing typical cost behavior as quantity increases, intersecting with curves A and C. - **Curve C**: Appears to be upward sloping, increasing as quantity increases, overlapping slightly with curve B. - **Curve D**: Downward sloping, below the other curves, suggesting decreasing costs with increased quantity. The intersection of curves A and B indicates a critical point of cost analysis. **Question:** In the figure, the intersection of curves A and B is the point at which: - A. average total cost is minimized. - B. average variable cost is minimized. - C. average fixed cost is minimized. - D. total product is maximized. This educational question prompts analysis of cost behaviors and optimization of production costs based on the interaction of these curves.
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