Which of the Following About Costs Is Always True

question 56

Multiple Choice

Which of the following about costs is always true?

• A) When marginal costs are less than average total costs, average total costs will be decreasing.
• B) When average fixed costs are falling, marginal costs must be less than average fixed costs.
• C) When average fixed costs are rising, marginal costs must be greater than average total costs.
• D) When marginal costs are greater than average total costs, average total costs will be decreasing.

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Definitions:

Fair Value Method

An accounting strategy used to assess the current market value of an asset or liability rather than its historical cost.

Unrealized Loss

A loss that has occurred on paper due to a decrease in the value of an investment or asset, but has not been realized through a transaction.

Fair Value Adjustment

A process of adjusting the book value of an asset or liability to reflect its current market value, used in accounting to ensure the fair presentation of financial statements.

Trading Portfolio

A collection of financial assets, such as stocks or bonds, held by an institution or individual for the purpose of realizing profits from short-term price movements.