Assume Both the Marginal Cost and the Average Variable Cost

question 81

Multiple Choice

Assume both the marginal cost and the average variable cost curves are U-shaped. At the minimum point on the AVC curve, marginal cost must be:

• A) greater than the average variable cost.
• B) ​less than the average variable cost.
• C) ​equal to the average variable cost.
• D) ​at its minimum.

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Definitions:

Margin of Safety

The difference between actual or projected sales and the sales break-even point, indicating risk level.

Dollars

The basic monetary unit used in the United States, symbolized as $, representing the currency.

Contribution Format

A type of income statement presentation that separates fixed costs from variable costs, helping to understand the profitability of a company.

Income Statement

A financial statement that summarizes a company's revenues, expenses, and profits or losses over a specific period.