The Short-Run Average Variable Cost Curve Eventually Begins to Increase

question 280

Multiple Choice

The short-run average variable cost curve eventually begins to increase at an increasing rate because of

• A) diseconomies of scale phenomena.
• B) a constraint that does not allow the firm to change its production technology.
• C) diminishing returns phenomena.
• D) increasing returns to scale to capital.

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Definitions:

Futures Contracts

Agreements to buy or sell a particular commodity or financial instrument at a predetermined price at a specific time in the future.

Non-monetary Items

Items on the balance sheet that cannot be readily converted into cash and are not carried at their cash value, such as property, plant, and equipment.

Fair Value

The estimated market value of an asset or liability, based on current market conditions and comparable transactions, used in financial reporting to provide a clear picture of a company’s financial health.

Exchange Rate

An exchange rate is the value of one currency expressed in terms of another currency, used to convert different currencies for trade and financial transactions.