A Short-Run Average Total Cost Curve Will Touch the Long-Run

question 61

Multiple Choice

A short-run average total cost curve will touch the long-run average cost curve at a level of output only

• A)where the short-run cost curve is downward sloping.
• B)where the short-run cost curve is upward sloping.
• C)when the quantity of the fixed factor being employed is at the optimal level for that level of output.
• D)where the short-run cost curve is downward-sloping and the quantity of the fixed factor is optimal.
• E)by coincidence.

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Definitions:

Book Value

The net value of an asset or liability according to its listing in the company's balance sheet, generally equal to its original cost minus any depreciation, amortization, or impairment costs.

Book Value per Share

The equity of a company divided by the number of outstanding shares, determining the accounting value of a share of stock.

Inventory on Credit

Inventory on credit refers to the purchase of goods that will be sold in the future without paying cash upfront, creating accounts payable for the business.

Acid-Test Ratio

A stringent indicator of a company's liquidity, calculating if it can meet its short-term obligations with its most liquid assets, excluding inventory.