During the Price Rise Associated with a Speculative Bubble, Capital

question 4

Multiple Choice

During the price rise associated with a speculative bubble, capital is invested:

• A) efficiently.
• B) in areas where it is not valuable.
• C) with less risk than usual.
• D) to prepare for another wave of price rises.

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Definitions:

Average Total Cost

The total cost of production (fixed plus variable costs) 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; a measure of economies of scale.

AVC

Average Variable Cost is the per-unit variable cost of production, which changes with the level of output.

Average Variable Cost

The cost per unit of output that varies directly with the volume of production, excluding fixed costs.