The U-Shaped Average Total Cost Curve Is

question 152

Multiple Choice

The U-shaped average total cost curve is

• A) a result of firms' wanting to find the output level where cost is at its minimum.
• B) unrealistic because average total cost always increases as output increases.
• C) the result of average fixed cost falling and decreasing marginal returns as output increases.
• D) a result of constant marginal returns.
• E) a result of increasing marginal returns.

Calculate contribution margin and gross margin, and understand their relevance in decision-making.

Apply cost-volume-profit analysis to make informed decisions.

Identify and calculate fixed, variable, and mixed costs using different methods (e.g., high-low method).

Estimate budgeted costs based on historical data and expected changes in the level of activity.