Which of the Following Conditions Best Explain the Short-Run Economies

question 296

Multiple Choice

Which of the following conditions best explain the short-run economies of operation associated with production of an information product?

• A) AVC slopes downward, and AFC is constant, so that ATC slopes downward.
• B) AVC is constant, and AFC slopes downward, so that ATC slopes downward.
• C) AFC is constant, and MC slopes downward, so that AVC slopes downward.
• D) MC is constant, and MC slopes upward, so that AVC slopes upward.

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Definitions:

Capital Allocation Line

A line on a graph that shows the risk-reward ratio of portfolios that combine a risk-free asset and a risky portfolio.

Optimal Risky Portfolio

An investment portfolio that offers the highest expected return for a specific level of risk.

Risk-free Rate

The theoretical rate of return on an investment with zero risk, often represented by the yield on government securities.

Lend

To provide money or resources to another party with the expectation of future repayment.