THE SHAPE OF THE LONG-RUN AVERAGE COST CURVE IS BEST EXPLAINED BY THE
A. law of diminishing returns B. law of returns to scale ✓ C. cost of fixed inputs D. cost of variable inputs The answer to the question is: B. law of returns to scale The shape of the long-run average cost (LRAC) curve is…
AS THE LEVEL OF OUTPUT INCREASES, THE AVERAGE FIXED COST OF A FIRM WILL
A. continue to decrease ✓ B. remain unchanged C. continue to increase D. be equal to the total cost The answer to the question is: A. continue to decrease As the level of output increases, the average fixed cost of a firm will continue…
WHEN THE COST OF SALES IS DIVIDED BY THE AVERAGE STOCK, THE RESULT IS
A. gross profit B. net profit C. rate of turnover ✓ D. working capital The answer to the question is: C. rate of turnover When the cost of sales is divided by the average stock, the result is rate of turnover. This calculation provides…