How Does the Average-Fixed-Cost Curve Behave

question 172

Multiple Choice

How does the average-fixed-cost curve behave

• A)It always declines with increased levels of output.
• B)It always rises with increased levels of output.
• C)It declines as long as it is above marginal cost.
• D)It declines as long as it is below marginal cost.

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Definitions:

Ask Price

The lowest price a seller is willing to accept for an asset in the financial markets; it contrasts with the bid price, which is the highest price a buyer is willing to pay.

Coupon Bond

A type of bond that provides periodic interest payments to its holder, based on a fixed interest rate (coupon rate) until its maturity, at which point the principal amount is repaid.

Accrued Interest

The interest that has accumulated on a bond since the last interest payment was made, which the buyer of the bond must pay to the seller if the bond is bought between interest payment dates.

Zero-Coupon Bond

A zero-coupon bond is a debt security that doesn't pay periodic interest but is sold at a deep discount, providing profit at maturity when the bond is redeemed for its full face value.