Average Fixed Cost Is Equal to

question 132

Multiple Choice

Average fixed cost is equal to

• A)the amount of total cost that does not change as output changes in the short run.
• B)fixed cost divided by the quantity of output produced.
• C)fixed cost multiplied by the quantity of output produced.
• D)average total cost plus average variable cost.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and outflows over a period of time, used in capital budgeting to assess profitability of investments.

Initial Investment

The amount of money used to start a new venture, purchase an asset, or stock in a portfolio, serving as the foundation for future financial performance and returns.

Present Value

The present worth of a future amount of money or series of cash flows when a certain rate of return is applied.

Multiple IRRs

This occurs when a project or investment has more than one internal rate of return, typically due to multiple cash flow sign changes over the investment's lifetime.