The Average Fixed Cost Curve Always Has a Negative Slope

question 14

Multiple Choice

The average fixed cost curve always has a negative slope because:

• A)marginal costs are below average fixed costs.
• B)average variable costs exceed marginal costs.
• C)total fixed costs always decrease.
• D)total fixed costs do not change as output increases.

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Definitions:

Collection Time

The duration it takes for a business to receive payments owed by its customers.

Lockbox System

A service provided by banks to companies for the receipt of payment from customers, whereby payments are sent directly to a post office box, rather than to the company, to expedite the deposit process.

Clearing Process

The procedure by which financial trades settle; that is, the correct and timely transfer of funds to the seller and securities to the buyer.

Zero-Balance Account

A bank account which maintains a balance of zero by automatically transferring funds from a master account in an amount only large enough to cover checks presented.