Regarding a Producer's Cost Structure

question 149

Multiple Choice

Regarding a producer's cost structure:

• A) marginal cost begins to rise at a lower level of output than average cost.
• B) total fixed costs increase continuously as more units are produced.
• C) average cost is the extra cost of producing one more unit.
• D) average costs usually drop for awhile and then start to rise when the economies of scale "run out."
• E) Both A and D are true.

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Definitions:

Inventory System

A mechanism for tracking and managing items that a company holds in stock, covering aspects like ordering, storing, using, and selling these goods.

Perpetual

Continuing indefinitely without a predetermined end in the context of perpetual inventory systems that continually update to reflect buying and selling activities.

Credit Period

The amount of time the buyer is allowed in which to pay the seller.

Merchandise

Goods that are bought and sold in business transactions.