As a Firm Expands Its Output, Cost Per Unit of Output

question 307

Multiple Choice

As a firm expands its output, cost per unit of output (average cost) decreases and then increases. Average cost and output have

• A) a relationship with a minimum.
• B) a relationship with a maximum.
• C) no relationship.
• D) a linear positive relationship.

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Definitions:

Income Tax

A tax levied by governments on individuals' or entities' income, which can vary depending on the amount of income earned.

Regressive Tax

A tax where the tax rate decreases as the taxpayer's income increases, placing a heavier burden on lower-income individuals.

Economy

A system of production, distribution, and consumption of goods and services among individuals and organizations in a society.

Taxable Income

The amount of income that is used to calculate how much tax an individual or a company owes to the government.