When a Firm Is No Longer Able to Reduce Its

question 176

True/False

When a firm is no longer able to reduce its long-run average cost by expanding, it has achieved its minimum efficient scale of production.

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Definitions:

Reward-to-Risk Ratio

A metric used in finance to compare the expected returns of an investment to the amount of risk undertaken to capture these returns.

Cost of Debt

The effective rate that a company pays on its current debt, including bonds and loans.

Yield to Maturity

The total return anticipated on a bond if the bond is held until its maturity date, factoring in its current market price, par value, coupon interest rate, and time to maturity.

Par

The face value of a bond or other financial instrument, the amount to be repaid by the issuer at maturity.