As Output Increases,average Variable Cost First Declines but Eventually Rises

question 31

Multiple Choice

As output increases,average variable cost first declines but eventually rises because

• A) average variable cost is derived by dividing a constant, the total variable cost, by the output rate.
• B) of the effect of the law of diminishing returns.
• C) it represents the addition to total cost resulting from the last unit of output.
• D) at higher output rates, fixed costs per unit are relatively large.
• E) if output is increased, total variable costs decline, then rise.

Grasp the fundamentals of the Capital Asset Pricing Model (CAPM) and the Security Market Line (SML).

Understand how the coefficient of variation is used to compare investment risks.

Recognize the role of the risk-free rate, market return, and beta in determining an investment's expected return.

Understand how changes in stock prices are influenced by investor expectations and market equilibrium dynamics.

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Definitions:

Retained Earnings

The portion of net income that is kept by a company rather than distributed to its shareholders as dividends, often used for reinvestment.

Retained Earnings

The portion of net income that is retained by a company rather than distributed to its shareholders as dividends.

Net Operating Income

The profit generated from a company's normal business operations, excluding non-operating income and expenses.

Materials Quantity Variance

Materials quantity variance is the difference between the actual quantity of materials used in production and the expected quantity, based on standard usage rates.