In the Short Run, an Expansion of Output Always Causes

question 171

Multiple Choice

In the short run, an expansion of output always causes in an increase in:

• A)TC.
• B)AFC.
• C)AVC.
• D)MC.
• E)all of the above.

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Definitions:

Unadjusted Cost of Goods Sold

The initial calculation of all costs directly associated with the production of goods sold by a company, not including any adjustments for inventory methods or valuation changes.

Operations

The day-to-day activities involved in running a business that are necessary for producing goods and services and generating revenue.

Direct Labor-Hours

The total hours worked by employees directly involved in the production process, used as a basis for assigning labor costs to products.

Predetermined Overhead Rate

An estimated overhead rate used to apply manufacturing overhead costs to products, calculated before the costs are actually incurred.