The Average Variable Cost Curve and Average Total Cost Curve

question 37

Multiple Choice

The average variable cost curve and average total cost curve become closer together as output increases because

• A) the marginal cost curve intersects the average total cost curve at its minimum.
• B) average fixed cost remains constant as output rises.
• C) average fixed cost, which is the difference between them, declines with output.
• D) output is rising more rapidly than inputs are being increased.

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Definitions:

Net Exports

The value of a country's total exports minus the value of its total imports; it is a component of a country's gross domestic product.

Investment

The expenditure on capital assets that may yield returns in the future, such as stocks, bonds, or physical property.

Price Level

A comprehensive mean of the existing prices for the economy's produced goods and services.

Consumption Spending

Expenditures by households on goods and services, excluding new housing.