The Pooling of Funds Is Required Because Surplus Units Typically

question 64

True/False

The pooling of funds is required because surplus units typically prefer short-term contracts for small amounts whereas deficit units commonly require large amounts for long periods.

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Definitions:

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, typically decreasing as production scale increases.

Average Variable Cost

The total variable costs (costs that change with output level) divided by the quantity of output produced.

AVC

Average Variable Cost; the cost of variable inputs divided by the quantity of output produced.

AFC

Average Fixed Cost, which is the fixed costs of production divided by the quantity of output produced.