The Average Variable Cost Curve and Average Total Cost Curve

question 37

Multiple Choice

The average variable cost curve and average total cost curve become closer together as output increases because

• A) the marginal cost curve intersects the average total cost curve at its minimum.
• B) average fixed cost remains constant as output rises.
• C) average fixed cost, which is the difference between them, declines with output.
• D) output is rising more rapidly than inputs are being increased.

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Definitions:

Losing Sales

The phenomenon of experiencing a decrease in the number of sales transactions or revenue, often as a result of competition, market shifts, or other external factors.

Seasonal Inventory

Goods or materials stocked in anticipation of seasonal demand variations.

Production System

A system that encompasses all activities required to create a product or service, from raw materials procurement to final output.

Low Demand

A situation characterized by a reduced desire or need for products or services in the market.