If Average Variable Cost Is Decreasing as Output Increases, Then

question 356

Multiple Choice

If average variable cost is decreasing as output increases, then marginal cost is definitely

• A) decreasing as output increases.
• B) increasing as output increases.
• C) less than average variable cost.
• D) greater than average variable cost.

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Definitions:

Direct Materials

The raw materials that are directly traceable to the production of goods.

Manufacturing Process

The sequence of operations involved in transforming raw materials into finished products.

Tangible Components

These are the physical assets of a business or product which can be seen, touched, and measured.

Manufacturing Cost

The total expense incurred in the process of producing a product, including raw materials, labor, and overhead costs.