Suppose a Firm's Fixed Costs Are $100 and Average Variable

question 18

Multiple Choice

Suppose a firm's fixed costs are $100 and average variable costs are constant regardless of output. Which of the following is then true?

• A) Average total cost will decrease when output is increased.
• B) Average total costs will be constant.
• C) Marginal cost will be less than average variable cost.
• D) Marginal cost will be rising as output rises.
• E) Marginal cost will equal average total cost.

---

Definitions:

Task-Oriented

An approach or behavior focused primarily on completing tasks and achieving objectives.

Fiedler's Model

A theory proposed by Fred Fiedler that suggests leadership effectiveness is contingent on both the leader's style of interacting with the group and the favorability of the leadership situation.

Contingency Theories

Management theories suggesting that optimal decisions or leadership styles depend on the specific situation and variables involved.

Lewin/Lippitt/White Study

A series of experiments by Kurt Lewin, Ronald Lippitt, and Ralph White that explored the effects of different leadership styles on group behavior.