Which of the Following Statements Regarding a Firm's Long-Run Average

question 187

Multiple Choice

Which of the following statements regarding a firm's long-run average total cost (LRATC) curve and its short-run average total cost (SRATC) curve is true?

• A)The shape of the LRATC is affected by the law of diminishing returns.
• B)The SRATC, but not the LRATC, can be used by a firm's managers for planning.
• C)The LRATC shows the lowest cost at which a firm is able to produce a given level of output when no inputs are fixed.
• D)The contribution of average fixed cost to LRATC is greater than its contribution to SRATC.

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Definitions:

Priority

The established right or order of precedence, often in the context of legal claims, debts, or interests over assets.

Personal Property Legislation

Laws and regulations governing the rights, ownership, and disputes of personal property, which is any movable property that is not fixed immovably to land.

Chattel Mortgage

A loan that is secured by movable personal property, such as a vehicle or mobile home, which the borrower can use while paying off the loan.

Debenture

A debt security issued by a corporation that may or may not have specific assets of the corporation pledged as security for payment.