The correct statement among the options provided is:
Each of the average cost variables provides cost information per unit.
Here's a brief explanation of each option:
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In the long run, all inputs are fixed. - This is incorrect. In the long run, all inputs can be varied (they are variable), which differentiates it from the short run, where some inputs are fixed.
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Each of the average cost variables is decreasing as output increases. - This statement is not necessarily true. Average costs can decrease, remain constant, or increase, depending on economies of scale, optimal production levels, and other factors.
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Each of the average cost variables provides cost information per unit. - This statement is correct. Average costs (like average total cost, average fixed cost, average variable cost) provide cost information on a per-unit basis.
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Marginal cost reveals the average cost per unit produced. - This is incorrect. Marginal cost refers to the additional cost incurred when producing one more unit, while average cost is the total cost divided by the number of units produced. Marginal cost can influence average cost but does not directly reveal it.
Thus, the correct and precise statement is about average cost variables providing cost information per unit.
1 answer