When a Firm's Marginal Cost Is Rising, We Know That

question 27

Multiple Choice

When a firm's marginal cost is rising, we know that

• A) average total cost must be rising.
• B) marginal product must be falling.
• C) average variable cost must be rising.
• D) average fixed cost must be rising.
• E) marginal product must be zero.

Understand the impact of implicit costs on economic profit.

Recognize the significance of capital in the context of opportunity costs.

Identify the types of costs associated with running a business or pursuing education.

Grasp the concept of economic profit and its importance in evaluating business performance.

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Definitions:

Trust Agreement

A legal document establishing a trust and outlining the rules and guidelines that the trustees must follow in managing the trust assets for the benefit of the beneficiaries.

Present Value

The worth in present terms of a sum of money due in the future or sequences of cash receipts, using a given rate of return for discounting.

Discount Rate

The rate of interest applied to calculate the current value of future cash flows.

Cash Flows

The sum total of cash and assets similar to cash that shift into and out of a commercial establishment.