When a Firm's Average Variable Cost Is Constant-No Matter How

question 177

Multiple Choice

When a firm's average variable cost is constant-no matter how much is produced-then the firm's:

• A) average cost will increase as the quantity produced increases.
• B) fixed cost must be zero.
• C) average cost will also be constant.
• D) average fixed cost will also be constant.
• E) average cost will decrease as the quantity produced increases.

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Definitions:

Annual Dividend

Annual dividend is the total amount of dividend payments a shareholder receives from a company in one year.

Zero Growth Stock

A stock in a company which is not expected to experience any growth in dividends or earnings and typically pays a high dividend yield.

Required Rate

The minimum return that investors expect or the company estimates it needs to generate from a capital investment or project to consider it viable.

Maximum Price

The highest price that a trader, investor, or consumer is willing to pay for a security or good.