At Low Output Levels a Firm's Average Total Cost Tends

question 123

Multiple Choice

At low output levels a firm's average total cost tends to be high because:

• A)marginal costs are increasing
• B)variable costs are spread over only a few units of output
• C)average fixed cost is large
• D)there is a shortage of experienced workers

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Definitions:

MRC

Marginal Revenue Cost, NO.

Pure Competition

A market structure in which a very large number of firms sells a standardized product, into which entry is very easy, in which the individual seller has no control over the product price, and in which there is no nonprice competition; a market characterized by a very large number of buyers and sellers.

Market Price

The current price at which a good or service can be bought or sold in the open market.

Marginal Revenue Product

The additional revenue generated by employing one more unit of a resource, such as labor or capital.