Consider a Cost Curve with Production Volume on the Horizontal

question 55

Multiple Choice

Consider a cost curve with production volume on the horizontal axis and marginal costs on the vertical axis. What shape would the marginal cost curve most resemble in a high-tech industry?

• A) Upward at a 45-degree angle
• B) U-shape
• C) Straight and vertical
• D) J-shape
• E) Straight and flat

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Definitions:

Depreciable Cost

The total cost of a fixed asset that can be depreciated over its useful life, excluding salvage value.

Residual Value

The estimated salvage value or the value of an asset at the end of its useful life.

Accumulated Depreciation

A cumulative account that records the depreciation expense of an asset, reducing its book value over time.

Initial Cost

The original acquisition cost of an asset or investment, prior to any adjustments for depreciation, improvement, or amortization.