Which of the Following Statements Best Describes Costs in the Long

question 90

Multiple Choice

Which of the following statements best describes costs in the long run?

• A) The average fixed cost curve is U-shaped.
• B) The average fixed cost exceeds the average variable cost of production.
• C) All costs are variable.
• D) All costs are fixed.

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Definitions:

Contribution Margin

The amount by which product sales revenue exceeds variable costs, showing how much contributes to covering fixed costs and generating profit.

Fixed Costs

Business expenses that do not change regardless of the level of production or sales activities, such as rent, salaries, and insurance.

Revenue

The total amount of income generated by the sale of goods or services related to a company's primary operations.

Income

The amount of revenue that remains after deducting the costs, expenses, and taxes related to earning that revenue.