A Firm That Has Lower Costs Per Unit as It

question 105

Multiple Choice

A firm that has lower costs per unit as it increases production in the long run has:

• A)increasing returns to scale.
• B)decreasing returns to scale.
• C)increasing opportunity costs.
• D)scale reduction.

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Definitions:

Real Option

The choice available to managers regarding business investments, such as expanding, deferring, or abandoning a project, based on changing conditions.

Fixed Price

A pricing strategy where the cost of a good, service, or contract does not change, regardless of variations in market conditions or production costs.

Asset

Any resource owned or controlled by a business or an individual that is expected to produce positive economic value.

Equity

represents the value of an ownership interest in a company, measured as the difference between assets and liabilities; it reflects what shareholders would theoretically receive if all assets were liquidated and debts repaid.