The Total Variable Cost Curve ________ Because ________ as Output

question 14

Multiple Choice

The total variable cost curve ________ because ________ as output increases.

• A) slopes upward; variable cost increases
• B) slopes upward; marginal cost increases
• C) slopes downward; variable cost increases
• D) slopes downward; marginal cost increases
• E) is horizontal; fixed cost does not change

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Definitions:

APC

Average Propensity to Consume, which is the fraction of income spent on consumption.

Gross Investment

The total amount of capital expenditure a company spends on maintaining and increasing the scope of its operations.

Net Investment

The total spending on new fixed investment minus depreciation on existing physical assets.

Depreciation

The process of allocating the cost of a tangible asset over its useful life, reflecting the decrease in value due to use, wear and tear, or obsolescence.