Which of the Following Will Cause the Average Fixed Cost

question 78

Multiple Choice

Which of the following will cause the average fixed cost curve of making cigarettes to shift?

• A) a $5 million penalty charged to each cigarette maker
• B) a $1 per pack tax on cigarettes
• C) a $3 per hour wage increase
• D) an increase in the demand for cigarettes

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Definitions:

Present Values

The present value of a future amount of money or series of payments, calculated using a designated interest rate.

Cash Inflows

Money or funds coming into a business or project, often as revenue, financing, or investment.

Cash Outflows

Money going out of a business, including expenses, investments, and distributions to shareholders.

NPV

Net Present Value; a method used in capital budgeting to evaluate the profitability of an investment or project by calculating the difference between the present value of cash inflows and the present value of cash outflows over a period of time.