Assume a Firm Is Operating at Minimum Average Total Cost

question 315

Multiple Choice

Assume a firm is operating at minimum average total cost in the short run. If there is a decrease in output, it follows that

• A)marginal cost increases.
• B)average fixed cost increases.
• C)average total cost decreases.
• D)average variable cost increases.

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Definitions:

Discount Period

The timeframe in which a buyer can take advantage of a discount for early payment on money owed.

Cost of Goods Purchased

The total expense incurred in buying goods for sale, including any additional costs necessary to get them into a saleable state.

Goods Purchased

Items bought by a business for the purpose of resale, production, or as part of its services.

Beginning Inventory

The value of goods available for sale at the start of an accounting period, serving as an important factor in calculating cost of goods sold.