Figure 7-11 -Figure 7-11 Shows an Average Cost Curve with Points on with Points

question 124

Multiple Choice

Figure 7-11
-Figure 7-11 shows an average cost curve with points on it that correspond to three quantity levels.Which of the following statements must be wrong?

• A)The firm's technology may show increasing marginal returns as production increases from A to B.
• B)The firm may have positive fixed costs.
• C)As production expands from A to B to C, the firm may become increasingly difficult to manage efficiently.
• D)The firm's average fixed cost may rise as production increases from B to C.

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Definitions:

Actual Operations

This term might be referring to the real, day-to-day activities or processes carried out by a business or organization, but it's not a standard accounting or finance term in itself.

Sales Budget Report

A financial plan that estimates future sales in units or monetary terms, often used to guide pricing, production, and marketing strategies.

Favorable Difference

A financial term indicating that actual revenues are higher than planned revenues or actual expenses are lower than planned expenses.

Unfavorable Difference

A situation where actual costs exceed the standard or expected costs, often referred to in budgeting and variance analysis.