Average Total Cost Equals

question 3

Multiple Choice

Average total cost equals:

• A)change in total costs / change in quantity produced
• B)(fixed costs + variable costs) / change in quantity produced
• C)change in total costs / quantity produced
• D)(fixed costs + variable costs) / quantity produced

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Definitions:

Equity Financing

A method of raising capital through the sale of shares in a company, providing investors ownership interests.

Debt Financing

The method of raising capital through the sale of bonds, notes, or loans, which must be repaid along with interest.

Marginal Cost

The cost of producing one additional unit of a product or service.

Optimal Capital Structure

The most favorable mix of debt and equity financing that minimizes a company's overall cost of capital while maximizing its stock price.