Your boss explains to you that the total fixed costs of the company are $1 million. He also informs you that each unit of production will cost twenty five cents more with each 100-unit increase
He has asked you to draw the fixed costs of the company with costs on the vertical axis and quantity of goods sold on the horizontal axis. Without drawing a graph tell your boss what the graph will look like using words. What information did your boss give you that you didn't need in order to draw the graph?
The fixed cost graph will be a horizontal line. The costs do not change with changes in output. The information that he gave me concerning how much additional units of production would cost is irrelevant since those are variable expenses and the boss was asking me to draw the fixed cost graph as a function of output.
You might also like to view...
In the shortrun (specific factors) model, FDI will cause _______________ in the return to capital and land and _______________ in the return to labor in the recipient country.
a. an increase; a decrease b. a decrease; an increase c. no change; an increase d. a decrease; no change
Normative analysis is very important to public finance because _____
a. public policy enacted by government is the result of voting by individuals b. positive analysis is full of value judgments c. we should be concerned with how the world works d. voluntary exchanges are economically efficient