If Average Variable Cost of Production Falls as Output Grows

question 186

Multiple Choice

If average variable cost of production falls as output grows

• A)marginal cost must also be declining.
• B)fixed cost must also be declining.
• C)total cost must also be declining.
• D)marginal cost must be below average variable cost.

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Definitions:

Net Present Value

The difference between the present value of cash inflows and the present value of cash outflows over a period of time, used in capital budgeting to assess profitability.

Analytical Methods

Techniques and procedures used to break down complex material or data into simpler parts to understand it better or reach conclusions.

Cash Flows

The full measure of financial transactions entering and leaving a business, essentially shaping its liquidity factor.

Discounted Cash Flow

An investment appraisal technique that values a project or an asset based on the present value of its expected future cash flows.