The Amount by Which Total Cost Rises When the Firm

question 59

Multiple Choice

The amount by which total cost rises when the firm produces one additional unit of output is called

• A)average cost.
• B)marginal cost.
• C)fixed cost.
• D)variable cost.

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Definitions:

Pre-Tax Cost

The expense or cost associated with an activity or asset before the application of taxes, often used in financial analysis.

Required Return

The minimum expected return investors demand for investing in a security or project.

Unlevered Return

A return on investment that doesn't account for debt, measuring the performance of an investment as if no borrowing took place.

Cost of Equity

The return a firm theoretically pays to its equity investors to compensate them for the risk they undertake by investing in the company.