The Average Variable Cost Curve and Average Total Cost Curve

question 37

Multiple Choice

The average variable cost curve and average total cost curve become closer together as output increases because

• A) the marginal cost curve intersects the average total cost curve at its minimum.
• B) average fixed cost remains constant as output rises.
• C) average fixed cost, which is the difference between them, declines with output.
• D) output is rising more rapidly than inputs are being increased.

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Definitions:

Marginal Product

The additional output produced as a result of adding one more unit of a specific input, holding all other inputs constant.

Resource

A source or supply from which a benefit is produced and that has some utility, which can include natural resources, human resources, and capital.

Units

A measurement or quantity of something, used in various contexts such as economics, to quantify production, sales, or other items.

Purely Competitive

A market structure characterized by an infinite number of small buyers and sellers where the product is a commodity, allowing no single participant to significantly influence price.