(Figure: Understanding Cost Curves 2) Match the Curves in the Figure

question 170

Multiple Choice

(Figure: Understanding Cost Curves 2) Match the curves in the figure (lines A, B, and C) with the correct cost curve name.

• A) A = marginal cost; B = average variable cost; C = average total cost
• B) A = average variable cost; B = average total cost; C = marginal cost
• C) A = marginal cost; B = average fixed cost; C = average total cost
• D) A = marginal cost; B = average total cost; C = average fixed cost

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Definitions:

Compounded Annually

An interest calculation method where interest is added to the principal sum at the end of each year, allowing for interest to be earned on interest in subsequent years.

Perpetuity

A type of annuity that pays a fixed amount of money to an individual indefinitely, without a set termination date.

Compounded Semi-annually

Describes a type of interest calculation where the interest is added to the principal amount twice a year, leading to interest on the interest in the next compounding period.

Ordinary Perpetuity

A series of indefinite cash flows that occur at regular intervals.