Average Variable Cost

question 32

Multiple Choice

Average variable cost:

• A)may be found for any output level by adding average cost and average fixed cost
• B)decreases as output rises
• C)increases as output rises
• D)equals fixed costs divided by total product
• E)graphs as a saucer-shaped curve

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Definitions:

Shipping Costs

The expenses involved in transporting goods from one location to another, including freight charges, packaging, and handling fees.

Diseconomies of Scale

An economic concept where an increase in production leads to a rise in average costs per unit due to inefficiencies.

Economies of Scale

Cost advantages that a business can achieve by increasing the scale of production, leading to lower average costs per unit due to spread fixed costs and operational efficiencies.

Cycle Inventory

The portion of inventory that a company rotates in and out of stock as part of its normal business operations, reflecting the frequency of production and ordering cycles.