If the Marginal Cost Curve Is Below the Average Variable

question 164

Multiple Choice

If the marginal cost curve is below the average variable cost curve, then

• A) average variable costs are increasing.
• B) average variable costs are decreasing.
• C) marginal cost must be decreasing.
• D) average variable costs could either be increasing or decreasing.

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Definitions:

Machine Breakdowns

Unplanned events where machinery or equipment fails and stops production, leading to potential delays and increased costs.

Lean Manufacturing

Lean manufacturing is a production methodology aimed at minimizing waste within manufacturing systems while simultaneously maximizing productivity.

Conversion Costs

The combined total of labor and manufacturing overhead expenses required to convert raw materials into finished goods.

Setup Time

The duration required to prepare equipment or processes for production, which can affect manufacturing efficiency and costs.