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

question 30

Multiple Choice

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

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

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Definitions:

Interest Rates

The amount charged, expressed as a percentage of the principal, by a lender to a borrower for the use of assets.

Variable Rate Loan

A loan with an interest rate that can change, based on a benchmark interest rate or index, affecting monthly payment amounts.

Call Option

A financial contract that gives the holder the right, but not the obligation, to buy a specified amount of an underlying asset at a set price within a specified time.

Put Option

An agreement in finance that allows the owner to sell a certain quantity of a basic asset at an agreed-upon price before a certain deadline, without being required to do so.