If There Is a Change in Input Prices, What Is

question 11

Multiple Choice

If there is a change in input prices, what is the most likely impact on production isoquants?

• A) They will shift leftward toward the origin.
• B) The curvature of the isoquant will change.
• C) They will remain unchanged.
• D) They will shift outward away from the origin.
• E) Uncertain, depends on which input prices change.

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Definitions:

Internal Rate of Return (IRR)

The Internal Rate of Return (IRR) is the rate at which the net present value of all the cash flows (both positive and negative) from a project or investment equals zero, used as a benchmark to decide the profitability of an investment.

Net Present Value (NPV)

NPV is a financial metric used in capital budgeting to assess the profitability of an investment or project, calculated as the difference between the present value of cash inflows and outflows.

Capital Budgeting

The process by which investors or company management evaluate and select long-term investments that are likely to yield positive returns.

Long-Term Effects

The lasting outcomes or impacts that result from a specific action or event, considered over an extended period of time.