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. Which of the following statements is true? Hint: If the level of output changes, only the variable costs will change. a.If both produce more, Kyle's costs will exceed Stan's costs. b.If both produce less, their costs will still be equal. c.If both produce more, their costs will still be equal. d.If both produce less, Kyle's costs will exceed Stan's costs.
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. Which of the following statements is true? Hint: If the level of output changes, only the variable costs will change. a.If both produce more, Kyle's costs will exceed Stan's costs. b.If both produce less, their costs will still be equal. c.If both produce more, their costs will still be equal. d.If both produce less, Kyle's costs will exceed Stan's costs.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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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. Which of the following statements is true?
Hint: If the level of output changes, only the variable costs will change.
Hint: If the level of output changes, only the variable costs will change.
a.If both produce more, Kyle's costs will exceed Stan's costs.
b.If both produce less, their costs will still be equal.
c.If both produce more, their costs will still be equal.
d.If both produce less, Kyle's costs will exceed Stan's costs.
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