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

question 4

Multiple Choice

The diagram below shows some short- run cost curves for a firm. FIGURE 7- 2 4
-Refer to Figure 7- 2. Which of the following choices correctly identifies the cost curves in part (i) of the figure?

• A) Curve 1 is the total cost curve. Curve 2 is the total variable cost curve. Curve 3 is the average fixed cost curve.
• B) Curve 1 is the total cost curve. Curve 2 is the total variable cost curve. Curve 3 is the total fixed cost curve.
• C) Curve 1 is the total marginal cost curve. Curve 2 is the total average cost curve. Curve 3 is the total average fixed cost curve.
• D) Curve 1 is the total fixed cost curve. Curve 2 is the total variable cost curve. Curve 3 is the total cost curve.
• E) Curve 1 is the total variable cost curve. Curve 2 is the total cost curve. Curve 3 is the total fixed cost curve.

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Definitions:

Futures Price

The agreed-upon price for the underlying asset in a futures contract to be paid at a future date.

Short Position

The futures trader committing to deliver the underlying asset.

S&P 500 Futures

Financial contracts that speculate on the future value of the S&P 500 index, allowing investors to predict and hedge against market movements.

Position

An investment holding or the amount of a particular security, commodity, or currency that an investor owns or has contracted to buy or sell.