The Long-Run Average Cost Curve Slopes Downward If There Are

question 44

Multiple Choice

The long-run average cost curve slopes downward if there are:

• A) some factors without diminishing marginal returns.
• B) economies of scope in the management of multiplant operations.
• C) economies of scale.
• D) diseconomies of scope in the management of multiplant operations.
• E) no factors without diminishing marginal returns.

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Definitions:

Variable Costs

Costs that change in proportion with the level of production or sales volume, such as materials and labor.

Fixed Costs

Expenses that do not change with the level of production or sales in the short term, such as rent, salaries, and equipment leases.

Variable Costs

Expenses that fluctuate in direct proportion to the volume of production or amount of output.

Fixed Costs

Expenses that do not change in total regardless of the level of production or sales activity, such as rent or salaries.