Why Do Small-Business Owners Want to Determine Whether Their Companies

question 21

Multiple Choice

Why do small-business owners want to determine whether their companies meet the standards for small-business designation? Because:

• A)they do not have to pay taxes on their profits.
• B)government agencies offer benefits designed to help small businesses compete with larger firms.
• C)incorporation is easier for them.
• D)banks are more likely to grant them loans.

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Definitions:

Average Total Cost

The total cost of production divided by the quantity produced, representing the per-unit cost of production, including both fixed and variable costs.

Diminishing Marginal Returns

A principle stating that as more of a variable input is added to a fixed input, beyond some point, the additional output produced from the additional input will eventually start to decrease.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good changes as production volume changes.

Average Variable Cost

The total variable costs of production divided by the number of units produced, measuring the cost per unit that varies with output level.