Which of the Following Explains Why Long-Run Average Total Cost

question 114

Multiple Choice

Which of the following explains why long-run average total cost at first decreases as output increases?

• A)diseconomies of scale
• B)less efficient use of lumpy inputs
• C)fixed costs become spread out over more units of output
• D)gains from specialization of inputs
• E)marginal costs rise at a slower rate than average costs in the short run

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Definitions:

Strike Price

The set price at which an option contract can be bought or sold when it is exercised.

Stock Price

Stock price is the cost of purchasing a share of a company, reflecting the market's valuation of the company at any given time.

Time Spread

An options strategy involving the purchase and sale of two options of the same type and strike price but with different expiration dates.

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying security.