Which of the Following Is Correct as It Relates to Cost

question 242

Multiple Choice

Which of the following is correct as it relates to cost curves?

• A) Average variable cost intersects marginal cost at the latter's minimum point.
• B) Marginal cost intersects average total cost at the latter's minimum point.
• C) Average fixed cost intersects marginal cost at the latter's minimum point.
• D) Marginal cost intersects average fixed cost at the latter's minimum point.

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Definitions:

Marginal Cost

is the cost incurred by producing one additional unit of a product or service.

Profits

The financial gain made in a transaction or operation, calculated as the difference between revenue and expenses.

Firm

A business organization, such as a corporation or partnership, that sells goods or services in exchange for revenue.

Profit-Maximizing Firm's Output

The output level at which a firm achieves the maximum possible profit, typically where marginal cost equals marginal revenue.