Suppose a Firm's Fixed Costs Are $100 and Average Variable

question 18

Multiple Choice

Suppose a firm's fixed costs are $100 and average variable costs are constant regardless of output. Which of the following is then true?

• A) Average total cost will decrease when output is increased.
• B) Average total costs will be constant.
• C) Marginal cost will be less than average variable cost.
• D) Marginal cost will be rising as output rises.
• E) Marginal cost will equal average total cost.

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Definitions:

No Taxation Without Representation

A slogan originating during the 1700s that summarized a primary grievance of the American colonists in the Thirteen Colonies, which was one of the major causes of the American Revolution.

House of Commons

The lower house of the Parliament of the United Kingdom, consisting of Members of Parliament (MPs) elected by the public to represent constituencies.

Virtual Representation

The idea that the American colonies, although they had no actual representative in Parliament, were “virtually” represented by all members of Parliament.

House of Commons

The lower house of the Parliament of the United Kingdom, consisting of Members of Parliament elected to represent constituencies.