As Long as Marginal Cost Is Less Than Average Variable

question 10

Multiple Choice

As long as marginal cost is less than average variable cost:

• A)both average total costs and average variable costs will be falling.
• B)average total costs will be falling but average costs may be rising or falling.
• C)average fixed costs are rising.
• D)average total costs are falling but average fixed costs may be rising.

---

Definitions:

Operating Expenses

The costs related to the day-to-day operations of a business, excluding cost of goods sold.

Cost of Goods Sold

The total cost of manufacturing or purchasing the goods a company has sold during a period.

Taxable Income

The portion of individual or corporate income subject to taxation, after all deductions and exemptions.

Retained Earnings

The portion of net income that is not distributed to shareholders but instead reinvested in the business or used to pay off debt.