Which of the Following Statements About the Average Total Cost

question 6

Multiple Choice

Which of the following statements about the average total cost curve is false?

• A)It is initially downward sloping because increases in quantity make the average fixed cost smaller.
• B)It eventually becomes upward sloping because the law of diminishing returns sets in.
• C)It is always downward sloping because the average fixed costs will always decrease as quantity increases.
• D)The marginal cost curve crosses the average total cost curve at the point at which average total cost is minimized.

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Definitions:

Interest Rates

The cost of borrowing money or the rate paid for deposits, typically expressed as a percentage.

Aggregate Demand

The overall desire for goods and services within an economy, identified at a given price level and during a specified timeframe.

Taxes

Mandatory monetary fees or different forms of taxes levied on a taxpayer by a government entity to finance government operations and a range of public expenses.

Permanent Tax

A concept in fiscal policy describing taxes that are intended to be implemented indefinitely or without a predetermined end date.