If a Firm Decides to Make the Investment Decision to Expand

question 32

Multiple Choice

If a firm decides to make the investment decision to expand its capacity,then it must have discovered that

• A)P = ATC.
• B)P > AVC.
• C)P > ATC.
• D)P = AVC.

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Definitions:

Net Cash Flows

The difference between cash inflows and cash outflows in a given period, reflecting the company's liquidity position.

Statement of Cash Flows

The statement of cash flows is a financial report that shows how changes in balance sheet accounts and income affect cash and cash equivalents, breaking the analysis down to operating, investing, and financing activities.

Net Increase

The difference between the current figure and the previous figure when the current figure is larger.

Financing Activities

Activities that result in changes in the size and composition of the equity capital and borrowings of an entity, including issuing shares, repaying loans, or paying dividends.