In the Short Run,average Total Costs at First Decrease and Then

question 45

Multiple Choice

In the short run,average total costs at first decrease and then increase as more output is produced because

• A) marginal cost is at first greater than average total costs,then falls below it.
• B) average fixed costs continually decrease.
• C) average variable costs at first decrease and then increase at the same level of output.
• D) total cost continually increases.
• E) marginal cost is at first less than average total costs,then rises above it.

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Definitions:

Direct Labor

The labor costs of workers who are directly involved in manufacturing a product or providing a service.

Overhead Costs

Overhead costs refer to ongoing expenses related to the operation of a business that are not directly tied to the production of goods or services, such as rent, utilities, and administrative salaries.

Work in Process

Partially finished goods that are still in the production process at the end of an accounting period.

Inadequately Trained Employees

Workers who lack the necessary skills, knowledge, or experience required to perform their job tasks efficiently and effectively.