When Marginal Cost Exceeds Average Total Cost Average

question 11

Multiple Choice

When marginal cost exceeds average total cost average:

• A) fixed cost must be falling
• B) fixed cost must be rising
• C) total cost is falling
• D) total cost must be rising

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Definitions:

Tax Purposes

Describes the reasoning or intention behind financial decisions or calculations made to comply with tax laws and regulations.

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting its consumption or loss of value over time.

Straight-line Method

A depreciation method that allocates an equal amount of the asset's cost to each accounting period over its expected useful life.

Book Value

The net value of a company's assets as recorded on the balance sheet, deducting liabilities, indicating the shareholder equity.