A Short-Run Average Total Cost Curve and a Long-Run Average

question 135

Multiple Choice

A short-run average total cost curve and a long-run average cost curve are tangent

• A)where the short-run cost curve is downward sloping.
• B)where the short-run cost curve is upward sloping.
• C)when the plant size is at the optimal level for that level of output.
• D)where the short-run cost curve is downward sloping and the plant size is optimal.
• E)by coincidence.

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Definitions:

Bad Debt Expense

An expense reported on the income statement, reflecting the cost of credit sales that are not expected to be collected.

Terms 2/10 N/30

A common payment term in business indicating that a buyer can take a 2% discount on the invoice price if payment is made within 10 days; otherwise, the full invoice price is due in 30 days.

Merchandise Returns

Goods returned by the buyer to the seller, often due to defects, dissatisfaction, or other reasons, leading to a reversal of the sale.

Cash Realizable Value

The net amount of cash expected to be received from receivables, after adjusting for any allowances for doubtful accounts.