Which of the Following About Costs Is True

question 62

Multiple Choice

Which of the following about costs is true?

• A) The difference between the ATC and AVC curves will decline as output expands.
• B) The AFC will remain constant as output increases.
• C) If ATC is increasing, then AVC must be greater than ATC.
• D) Implicit costs and fixed costs are always the same.

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment's value is adjusted to reflect the investor's share of the company's post-acquisition earnings or losses.

Gross Profit

The difference between revenue and the cost of goods sold, before deducting overheads, salaries, and other operating expenses.