Which of the Following Will Become Smaller and Smaller as the Firm

question 152

Multiple Choice

Which of the following will become smaller and smaller as the firm expands output?

• A) average total cost
• B) average fixed cost
• C) marginal cost
• D) total fixed cost

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Definitions:

Incremental Pre-tax Profits

Additional earnings before taxes that result from specific actions or decisions, used in investment appraisal.

Variable Costs

Variable costs are expenses that change in proportion to the activity of a business, such as sales volume or production levels.

Credit Terms

The conditions, including payment deadlines and interest rates, under which credit is extended to a borrower.

Aging Schedules

Timetables in accounting that categorize a company's accounts receivable according to the length of time an invoice has been outstanding.