A Firm with Fixed Costs Produces at the Lowest Point

question 135

Multiple Choice

A firm with fixed costs produces at the lowest point on its U-shaped average variable cost curve. If it raises output by 1 unit, then average

• A) fixed cost will increase.
• B) total cost will decrease.
• C) fixed cost will necessarily be below average variable cost.
• D) total cost will be less than average variable cost.

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