Because a New Business Has Grown Considerably,it Can Now Purchase

question 14

Multiple Choice

Because a new business has grown considerably,it can now purchase larger quantities of a certain raw material. Purchasing in larger quantities allows the company to get a lower price per pound of the raw material. Which of the following is related to this situation?

• A) Average fixed costs will decrease.
• B) Average variable costs will decrease.
• C) This is the idea of purchasing by licensing.
• D) Average managerial capacity will increase.
• E) Cash flow will decrease.

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Definitions:

Aggregate Demand

The overall request for every good and service within an economic system at varying prices over a particular timeframe.

Monetary Policy

Actions of a central bank, currency board, or other regulatory authorities that determine the size and rate of growth of the money supply, which in turn affects interest rates.

Fiscal Policy

Government policies regarding taxation and spending that influence economic conditions.

Rational Expectations

The hypothesis that individuals form forecasts about the future based on all available information in an unbiased and logical manner.