Which of the Following Is Characteristic of Short-Run Costs Associated

question 68

Multiple Choice

Which of the following is characteristic of short-run costs associated with increasing levels of output?

• A)The difference between average total cost and average variable cost decreases.
• B)Average variable cost typically increases.
• C)Average total cost is equal to the difference between average variable cost and average fixed cost.
• D)Average fixed cost is constant.
• E)Marginal cost is equal to the difference between total cost and total variable cost.

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Definitions:

Daily Profit

The financial gain or loss a business makes in a single day, calculated by subtracting total daily expenses from total daily revenue.

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.

Profit-maximizing

The process or strategy by which a firm determines the price and output level that returns the greatest profit.

Ethanol

A renewable fuel made from various plant materials, which can be used as an alternative to gasoline.