Investment Decisions Are Made on the Basis of the Relationship

question 39

Multiple Choice

Investment decisions are made on the basis of the relationship of price to

• A)Short-run average total cost.
• B)Short-run marginal cost.
• C)Long-run fixed cost.
• D)Long-run average total cost.

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Definitions:

Economic Profits

The difference between total revenues and total costs, including both explicit and implicit costs, representing the additional gain to entrepreneurs beyond the normal profit rate.

Accounting Profits

The financial gain calculated by subtracting total explicit costs from total revenue, according to standard accounting practices.

Industry Expansion

The growth in production, workforce, or market share within a specific sector of the economy.

Constant-cost Industry

An industry in which the costs of production or the prices of inputs do not change as the industry expands or contracts.