The Slope of the Consumption Function Is

question 115

Multiple Choice

The slope of the consumption function is

• A)less than the slope of the 45- degree line but not equal to zero.
• B)equal to the slope of the 45- degree line.
• C)greater than the slope of the 45- degree line.
• D)equal to zero.

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Definitions:

TR = TC

The condition where total revenue equals total cost, indicating a break-even point in financial performance.

MR = MC

A principle in economics where the optimal level of production is reached when Marginal Revenue (MR) equals Marginal Cost (MC).

P < AVC

A condition where the price (P) of a good is less than the average variable cost (AVC), indicating a firm is not covering its variable costs and may cease production in the short run.

Average Total Cost

Average Total Cost is the total cost of production divided by the quantity produced, encompassing both fixed and variable costs.