Whenever a Firm's Marginal Costs Are Less Than Its Average

question 46

Multiple Choice

Whenever a firm's marginal costs are less than its average costs,
Its average costs must be:

• A)falling.
• B)rising.
• C)constant.
• D)falling, then rising.

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Definitions:

Equity Method

An accounting technique used to record investments in associate companies, recognizing the investor's share of the earnings as income.

Dividends

Payments made by a corporation to its shareholder members. It is the portion of corporate profits paid out to stockholders.

Investment

The action of deploying resources (such as capital) with the expectation of generating an income or profit.

Cost Method

is an accounting approach used for recording investments, where the investment is recorded at its acquisition cost and adjustments are made for dividends or interest earned and changes in value are not recognized until sold.