One of the Major Reasons for the U-Shaped Average Total

question 55

Multiple Choice

One of the major reasons for the U-shaped average total cost curve is the fact that

• A) there are increasing returns from labor regardless of the number of workers employed.
• B) there eventually are decreasing returns from labor as more workers are employed.
• C) prices fall as output increases.
• D) the average fixed cost increases as more output is produced.
• E) the variable cost decreases as more output is produced.

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Definitions:

Fair Value

The amount one would get from selling an asset or the cost to transfer a liability during a structured exchange between participants in the market.

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Proportionately Adjusted Balance Sheet

A financial statement showing assets, liabilities, and equity after adjustments have been made to reflect a fair proportionate value based on ownership interests or specific conditions.

Inventory

The raw materials, work-in-process products, and finished goods that a company holds for the purpose of sale in the near future.