The Table Given Below Shows the Average Total Cost of Production

question 98

Multiple Choice

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5

-Diseconomies of scale:

• A)occur only in the short run.
• B)occur when at least one resource is fixed and unit costs decrease as the quantity of production increases.
• C)occur when at least one resource is fixed and unit costs increase as the quantity of production increases.
• D)are represented by the upward-sloping portion of the short run average total cost curve.
• E)occur when all resources are variable and unit costs increase as the quantity of production increases.

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Definitions:

Normal Capacity

The average level of operational output or activity that a company can sustain over a long period, considering fluctuations in demand and maintenance schedules.

Cost Variance

The difference between the actual cost and the standard or planned cost in a budget.

Standard Cost

A predetermined cost of manufacturing, selling, or any other business activity, used for budgeting and performance evaluation.

Actual Cost

The actual expense incurred to acquire an asset or service, including all amounts spent to bring the item to a usable condition and location.