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If the NPV of a Firm Is Negative, Then It

question 28

True/False

If the NPV of a firm is negative, then it should undertake the investment; if it is positive, the firm should not undertake the investment.


Definitions:

Average Total Cost

The total cost of production (fixed plus variable costs) divided by the total amount of output produced, indicating the cost per unit of output.

Marginal Cost

The production cost for one more unit of a product.

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good varies.

Average Total Cost

The per unit cost of production, computed by dividing the total cost of production by the total quantity of output.

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