Suppose There Are Fixed Costs and Marginal Costs That Are

question 315

Multiple Choice

Suppose there are fixed costs and marginal costs that are constant. Then we know that

• A) average total costs are also constant.
• B) average variable costs decrease continuously as output increases, and lie above the marginal cost curve.
• C) average total costs decrease continuously as output increases, and lie above the average variable cost curve, which also is decreasing continuously.
• D) average total costs decrease continuously as output increases, and lie above the average variable cost curve, which is constant.

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Definitions:

Rate

A ratio that measures how one quantity changes in relation to another.

Sum

The outcome of summing two or more numbers.

Infinite Series

A sum of infinitely many terms following a specific pattern.

Binomial Coefficient

A numerical value that represents the number of ways in which k objects can be chosen from n objects without repetition and regardless of order.