The Diagram Shows the Short-Run Average Total Cost Curves for Five

question 32

Multiple Choice

The diagram shows the short-run average total cost curves for five different plant sizes of a firm. If in the long run the firm should produce output 0 x, it should do it with a plant of size

• A)#4.
• B)#3.
• C)#2.
• D)#1.

Comprehend the principles of asset allocation between risky and risk-free assets.

Understand the implications of borrowing and lending rates on portfolio choice.

Recognize the utility theory basics and its application in investment decisions.

Understand the role of the capital market line (CML) in investment decisions.

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Definitions:

Fixed Cost

Expenses that do not change with the level of goods or services produced by a business, such as rent, salaries, and insurance.

Variable

An element, feature, or factor that is liable to vary or change, often used in the context of experiments or mathematical models.

Output

The total amount of goods and services produced by an economy, company, or sector.

AVC

Average Variable Cost is the total variable costs divided by the quantity of output produced, representing the variable cost per unit of output.