In the Short Run, Suppose Average Total Cost Is a Straight

question 171

Multiple Choice

In the short run, suppose average total cost is a straight line and marginal cost is positive and constant. Then, we know that fixed costs must:

• A) be declining with output.
• B) be positive.
• C) equal zero.
• D) We do not have enough information to answer this question.

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Definitions:

Spending Variance

The difference between the budgeted or planned amount of expenses and the actual amount spent.

Supplies Costs

Expenses associated with the purchase of supplies needed for the operation of a business or the production of goods.

Spending Variance

The difference between the actual and budgeted amount of spending, indicating over or under spending.

Total Expenses

The sum of all expenses incurred by a business during a specified period, including cost of goods sold, operating expenses, and other charges.