Scenario 7.1: The Average Total Cost to Produce 100 Cookies Is $0.25

question 57

Multiple Choice

Scenario 7.1:
The average total cost to produce 100 cookies is $0.25 per cookie. The marginal cost is constant at $0.10 for all cookies produced.
-Refer to Scenario 7.1. For 100 cookies, the average total cost is:

• A) falling.
• B) rising.
• C) neither rising nor falling.
• D) less than average fixed cost.

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Definitions:

Asset

An item of value owned by an individual or corporation that is expected to provide future economic benefits.

Adjusting Entry

A journal entry made in accounting records to update the book values of certain assets or liabilities to their correct amounts.

Principal

The original sum of money borrowed in a loan or the initial amount of investment before any earnings or interest is added.

Interest

The charge for borrowing money or the compensation paid to a lender by a borrower for the use of borrowed funds.