Economies of Scale Are Present When

question 97

Multiple Choice

Economies of scale are present when

• A)the LRAC curve slopes downward.
• B)average total cost remains constant as input increases.
• C)average total cost rises as output increases.
• D)the LRAC curve is horizontal.
• E)total fixed cost increases.

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Definitions:

FIFO

First-In, First-Out, an inventory valuation method where goods purchased first are sold first.

Weighted Average

A calculation that takes into account the varying degrees of importance of the numbers in a data set.

Net Realizable Value

The estimated selling price of goods minus the costs of their sale or disposal.

Lower of Cost

An inventory valuation method requiring inventory to be recorded at the lower of its historical cost or current market value.