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:

Merchandise Inventory

The goods a company holds for the purpose of resale to customers.

Customer Refunds Payable

A liability account for estimated refunds and allowances that will be paid or granted customers in the future.

Merchandise Returns

Goods returned by the buyer to the seller, often due to defects, wrong size, or dissatisfaction.

Purchase Discounts

A deduction from the original purchase price allowed by the seller to the buyer, typically for early payment or bulk purchasing.