A Decrease in Long-Run Average Costs Resulting from Increases in Output

question 35

Multiple Choice

A decrease in long-run average costs resulting from increases in output is

• A) attributed to economies of scale.
• B) attributed to diseconomies to scale.
• C) attributed to constant returns to scale.
• D) attributed to the law of diminishing marginal product.

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Definitions:

Period Cost

Expenses that are not directly tied to the production of goods and are instead associated with time periods, such as administrative salaries.

Variable Costing

A method of cost accounting where only variable production costs are included in product costs, with fixed overhead expenses treated as period costs.

Unit Product Cost

The total cost associated with producing a single unit of a product, calculated by dividing the total production costs by the number of units produced.

Variable Costing

A technique in management accounting that only considers variable production costs as product costs, with fixed costs treated as period costs.