Firms That Produce an Information Product Experience Short-Run Economies of Operation

question 116

Multiple Choice

Firms that produce an information product experience short-run economies of operation because

• A) the firm will always produce in the decreasing portion of the marginal cost curve.
• B) of the U-shaped nature of the average total cost curve.
• C) of the U-shaped nature of the average variable cost curve.
• D) the average total cost of producing and selling the product declines as output increases.

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Definitions:

Natural Resource Depletion

The consumption of natural resources faster than they can be replenished, specifically accounted for in the valuation and depreciation of such resources by companies.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, culminating in its net income or loss for that period.

Depreciable Asset

An asset that loses value over time due to use, wear and tear, or obsolescence, and whose cost can be allocated over its useful life.

Net Income

A company's remaining income after deducting all costs and taxes from its revenue.