In the Typical AC Curve, the Downward-Sloping Part Is Attributable

question 172

Multiple Choice

In the typical AC curve, the downward-sloping part is attributable to

• A)spreading fixed costs over larger outputs and increasing returns to the variable inputs.
• B)declining administrative costs as output increases.
• C)falling fixed costs.
• D)rising total product.

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Definitions:

Marginal Cost

The cost of producing one more unit of a good or service, often key to determining the optimal level of production.

Competitive Market

A market structure characterized by a large number of buyers and sellers, free entry and exit, and products that are similar enough to be considered substitutes.

Nonexcludable

A characteristic of a good or service that prevents individuals who have not paid for it from being easily excluded from its consumption or use.

Nonrival

A characteristic of goods where one person's consumption does not diminish the ability of others to consume the same good.