In the Short Run Average Costs Eventually ________ Because of Diminishing

question 229

Multiple Choice

In the short run average costs eventually ________ because of diminishing returns, and in the long run average costs eventually ________ because of diseconomies of scale.

• A) increase; increase
• B) increase; decrease
• C) decrease; increase
• D) decrease; decrease

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Definitions:

Consolidated Sales

The total sales of a parent company and its subsidiaries, after eliminating intercompany sales, presented as a single sales figure for the entire company group.

Intra-entity Transfers

Transactions of goods, services, or funds between units of the same company, often requiring elimination adjustments during consolidation.

Straight-Line Method

A method of calculating depreciation and amortization, dividing the difference between an asset's cost and its salvage value by the number of years it is expected to be used.

Straight-Line Depreciation

A method of allocating the cost of a tangible asset over its useful life in equal annual amounts.