The Diagram Below Shows Some Short- Run Cost Curves for a Firm

question 50

Multiple Choice

The diagram below shows some short- run cost curves for a firm.
FIGURE 7- 2
-Refer to Figure 7- 2.Which of the following choices correctly identifies the cost curves in part (ii) of the figure?

• A)Curve 4 is the marginal cost curve.Curve 5 is the average fixed cost curve. Curve 6 is the average variable cost curve.Curve 7 is the average total cost curve.
• B)Curve 4 is the average fixed cost curve.Curve 5 is the average total cost curve.Curve 6 is the marginal cost curve. Curve 7 is the average variable cost curve.
• C)Curve 4 is the marginal cost curve. Curve 5 is the average variable cost curve.Curve 6 is the average fixed cost curve. Curve 7 is the average total cost curve.
• D)Curve 4 is the marginal cost curve.Curve 5 is the average total cost curve. Curve 6 is the average variable cost curve.Curve 7 is the average fixed cost curve.
• E)Curve 4 is the average total cost curve.Curve 5 is the marginal cost curve. Curve 6 is the average variable cost curve.Curve 7 is the average fixed cost curve.

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Definitions:

Passive Activity

Passive activity involves business or trade activities in which the person is not actively involved, affecting how losses and income are treated for tax purposes.

Suspended Losses

Losses that cannot be deducted in the current year and must be carried forward to future years for deduction under certain tax rules.

Actively Participated

Actively Participated refers to a taxpayer's involvement in the operations and decision-making of an investment or business activity, which may affect tax treatment.

Class Asset

Categories of assets grouped together based on having similar financial characteristics, often used in finance for valuation and risk assessment.