When Average Costs of Production Are Falling, Average Cost

question 2

Multiple Choice

When average costs of production are falling, average cost:

• A) is higher than marginal cost.
• B) is equal to price.
• C) is negative.
• D) is less than marginal cost.

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Definitions:

Net Income

The net income of a business following the subtraction of all costs and tax obligations from its total earnings.

Periodic Inventory System

A method of inventory management in which the inventory levels are updated and cost of goods sold is calculated periodically at the end of a reporting period.

Adjusted Trial Balance

A list of all accounts and their balances after adjusting entries have been made, used to prepare financial statements.

Net Income

The total earnings of a company after subtracting all expenses, taxes, and costs from its total revenue.