The Average Total Cost Curve Indicates That

question 110

Multiple Choice

The average total cost curve indicates that

• A) as output rises in the short run, costs decline rapidly.
• B) as output rises in the short run, per unit costs initially fall but eventually rise.
• C) firms generally operate at a highly inefficient point of production.
• D) costs cannot be contained even if businesses employ the proper combination of resources.
• E) as more output is produced in the short run, average total costs must increase.

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Definitions:

Ratio

A mathematical expression that compares two numbers by division, indicating how much of one value there is compared to another.

Share Holdings

Ownership of a portion of a company through possession of its stock.

Lowest Terms

A fraction simplified to its most basic form, where the numerator and denominator are the smallest possible integers.

Ratio

A numerical ratio representing how often one number can be divided by another, showing either how many times one is included in the other or vice versa.