If the Minimum Points of All the Possible Short-Run Average

question 206

Multiple Choice

If the minimum points of all the possible short-run average total cost curves become successively lower as quantity of output increases, then:

• A) the firm should try to produce less output.
• B) total fixed costs are constant along the LRAC curve.
• C) there are economies of scale.
• D) the firm is probably having significant management problems.
• E) when output is doubled, total costs are doubled.

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Definitions:

Capital Gains

The profit earned from the sale of an asset, such as stock or real estate, which has increased in value over the time it was held.

Interest Rates

The cost of borrowing money or the reward for saving money, expressed as a percentage of the amount borrowed or saved.

Corporate Profits

The earnings of corporations after expenses and taxes have been deducted.

Stock Prices

The monetary value assigned to a company's ownership shares, as determined by market supply and demand.