The Average Variable Cost Curve Shifts Downward If

question 443

Multiple Choice

The average variable cost curve shifts downward if

• A) there is a decrease in fixed costs.
• B) there is a technological advance.
• C) the cost of a variable input increases.
• D) the price of output decreases.

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Definitions:

Deadweight Loss

The reduction in economic productivity that happens when a good or service does not reach or cannot reach its equilibrium state.

Natural Monopoly

A market condition where a single firm can provide a good or service at a lower cost than any competitors, due to economies of scale.

Public Ownership

Public ownership denotes ownership by the government or a public entity, often applied to assets, utilities, or enterprises meant for public benefit.

Perfectly Competitive Markets

A market structure characterized by many buyers and sellers, homogenous products, and no barriers to entry or exit.