Average Variable and Average Total Costs Get Farther Apart as Output

question 217

Multiple Choice

Average variable and average total costs get farther apart as output decreases because ________ as output decreases.

• A) diminishing returns set in
• B) average fixed costs increase
• C) marginal costs increase
• D) total and total variable costs get farther apart

---

Definitions:

Price Ceiling

A government-imposed limit on how high a price can be charged for a product, service, or resource, typically set below the equilibrium price.

Shortage

A situation in which the demand for a product or service exceeds the supply available at a particular price.

Non-price Factors

Variables other than price that affect the demand and supply of goods and services, such as consumer preferences, income, and technology.

Price Ceiling

A legal maximum price that can be charged for a good or service, intended to protect consumers from high prices.