The Short-Run Average Total Cost, Average Variable Cost, and Marginal

question 259

Multiple Choice

The short-run average total cost, average variable cost, and marginal cost curves are all U-shaped because of i. constant total fixed cost.
Ii. increasing and then decreasing marginal returns as more labor is hired.
Iii. economies and diseconomies of scale as the plant size increases.

• A)only i
• B)only ii
• C)i and iii
• D)ii and iii
• E)i, ii, and iii

---

Definitions:

Gross Margin

Gross margin is the difference between revenue and cost of goods sold, expressed as a percentage of revenue.

Return On Total Assets

A financial ratio that measures a company's profitability relative to its total assets, indicating how effectively the company uses its assets to generate profit.

Return On Equity

A financial ratio indicating the profitability of a firm relative to shareholder equity, showing how effectively equity is used to generate profits.

Gross Margin

The difference between sales revenue and the cost of goods sold, indicating the profitability of a product or service.