Author Question: For any given level of output: A) marginal cost must be greater than average cost. B) average ... (Read 173 times)

tfester · **on:** Jul 1, 2018

For any given level of output:

A) marginal cost must be greater than average cost.
B) average variable cost must be greater than average fixed cost.
C) average fixed cost must be greater than average variable cost.
D) fixed cost must be greater than variable cost.
E) None of the above is necessarily correct.

Question 2

Refer to Scenario 5.5. Jalopy Automotive's executives,

A) if risk-neutral, would fix the flaw because it enables them to have a sure outcome.
B) if risk-neutral, would fix the flaw because the cost of fixing the flaw is less than the expected cost of not fixing it.
C) if risk-loving, would fix the flaw because it enables them to have a sure outcome.
D) if risk-averse, would not fix the flaw because the cost of fixing the flaw is more than the expected cost of not fixing it.
E) would fix the flaw regardless of their risk preference, because of the large probability of high-cost outcomes.