If Marginal Cost Exceeds Average Variable Cost but Is Less

question 237

Multiple Choice

If marginal cost exceeds average variable cost but is less than average total cost, then as output increases average total cost ________ and average variable cost ________.

• A) increases; decreases
• B) decreases; decreases
• C) increases; increases
• D) decreases; increases

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Definitions:

Capacity Planning

The method of calculating the manufacturing capability required by a company to adapt to fluctuating needs for its goods.

Aggregate Planning

A process in operations management aimed at determining the optimal production levels, inventory, and workforce to meet expected demand over a medium-term horizon.

Master Schedule

A detailed plan that outlines the production activities, timelines, and resources needed to manufacture a product.

Short-Term Schedule

A plan that outlines specific tasks or activities to be completed within a relatively brief period, typically ranging from days to a few weeks.