If the 15th Unit of Output Has a Marginal Cost

question 292

Multiple Choice

If the 15th unit of output has a marginal cost of $29.50 and the average cost of producing 14 units of output is $30.23, what will happen to the average cost of production if the 15th unit is produced?

• A)Average cost increases as more is produced.
• B)Average cost will fall.
• C)Average cost could increase or decrease depending on what happens to variable cost.
• D)Average cost could increase or decrease depending on what happens to fixed cost.

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Definitions:

Carrying Value

The carrying value, or book value, is the value of an asset as recorded on the balance sheet, considering factors like depreciation and amortization.

Recoverable Amount

The higher of an asset's fair value less costs to sell and its value in use, indicating the maximum amount that can be recovered from an asset through its use or sale.

Impairment Loss

A decrease in the book value of a company's asset when the asset's market value drops below its book value.

Statement of Cash Flows

A document that explains how fluctuations in balance sheet accounts and income streams affect cash and cash equivalents, dividing the analysis among operating, investing, and financing operations.