A Firm Enters into a Consent Decree to Avoid an Even

question 125

Multiple Choice

A firm enters into a consent decree to avoid an even greater legal setback.If the terms of the consent decree effectively double the firm's fixed costs, then

• A)marginal cost more than doubles
• B)marginal cost doubles
• C)marginal cost remains unchanged
• D)average total cost remains unchanged
• E)average variable cost doubles

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Definitions:

Cost Of Capital

The total cost of funds used for financing a business, which may include debt and equity financing costs.

Cost Of Labor

The total amount of financial compensation and benefits paid to employees for their work, including wages, salaries, and benefits.

Isocost Line

An isocost line represents all combinations of inputs (like labor and capital) that cost the same amount for a firm, illustrating budget constraints in production.

Total Cost

A combination of constant and fluctuating expenses that a company endures in the process of producing goods or services.