The Diagram Below Shows Some Short- Run Cost Curves for a Firm

question 4

Multiple Choice

The diagram below shows some short- run cost curves for a firm. FIGURE 7- 2 4
-Refer to Figure 7- 2. Which of the following choices correctly identifies the cost curves in part (i) of the figure?

• A) Curve 1 is the total cost curve. Curve 2 is the total variable cost curve. Curve 3 is the average fixed cost curve.
• B) Curve 1 is the total cost curve. Curve 2 is the total variable cost curve. Curve 3 is the total fixed cost curve.
• C) Curve 1 is the total marginal cost curve. Curve 2 is the total average cost curve. Curve 3 is the total average fixed cost curve.
• D) Curve 1 is the total fixed cost curve. Curve 2 is the total variable cost curve. Curve 3 is the total cost curve.
• E) Curve 1 is the total variable cost curve. Curve 2 is the total cost curve. Curve 3 is the total fixed cost curve.

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Definitions:

Significance Level

The likelihood of mistakenly dismissing the null hypothesis, typically represented by alpha, when in truth it holds.

Null Hypothesis

A statement or hypothesis that assumes no statistical significance or effect exists in a set of observations or experiment.

Two-Tailed Test

A hypothesis test in which the critical area for a rejection of the null hypothesis is in both tails of the probability distribution, allowing for testing of deviations in both directions.

Population Mean

The average of all the values in a population, representing the central tendency of the total population.