Refer to the Diagram

question 235

Multiple Choice

Refer to the diagram. The vertical distance between ATC and AVC reflects

• A)the law of diminishing returns.
• B)the average fixed cost at each level of output.
• C)marginal cost at each level of output.
• D)the presence of economies of scale.

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Definitions:

Semiannual Interest

Interest that is computed and disbursed semi-annually, commonly found in agreements for bonds and loans.

Bonds Dated

The date at which the bond is issued, establishing when interest payments will start to accrue and when the bond becomes mature for repayment.

Fair Value Method

An accounting approach that estimates the price to sell an asset or settle a liability, based on current market conditions.

Short-term Investments

Investments that are easily convertible into cash, typically within five years or less, used to generate income on surplus funds.