Average Total Cost of Producing 100 Units of Output Is

question 254

True/False

Average total cost of producing 100 units of output is $5. If the marginal cost of producing the 101st unit is $4, then average total cost of 101 units is less than $5.

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Definitions:

Course of Action

A decision plan or set of steps to be followed to solve a problem or achieve an objective.

Contribution Margin

The amount remaining from sales revenue after variable costs are deducted, used to cover fixed costs and generate profit.

Differential Revenue

Differential revenue is the difference in revenue between two alternative decisions or periods, highlighting the potential increase or decrease in income resulting from a chosen action.

Condensed Income Statement

A simplified income statement that presents only key revenue and expense items, ignoring detailed breakdowns.