If a Firm Increases Its Output and Finds That Its

question 35

Multiple Choice

If a firm increases its output and finds that its average total cost decreases as a result, this implies that

• A) marginal cost exceeds average total cost.
• B) the cost of producing an additional unit of output is more than the average total cost.
• C) average fixed cost is increasing.
• D) average total cost exceeds marginal cost.

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Definitions:

Offeree

The person to whom an offer is made in a contract situation.

Capacity

The legal ability of an individual or organization to enter into a contract, including being of the required age and sound mind.

Exemption Clauses

Provisions in a contract that limit or exclude one party's liability for certain breaches or damages.

Breach of Contract

A violation of any of the agreed terms and conditions of a contract, which can give rise to legal action for damages.