If a Firm Is Producing a Given Level of Output

question 24

Multiple Choice

If a firm is producing a given level of output in an economically efficient manner,then it must be the case that

• A)this is the lowest cost method of producing that output.
• B)each input is producing its maximum marginal product.
• C)this output level is the most that can be produced with the given level of inputs.
• D)both a and c
• E)none of the above

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Definitions:

Capital Expenditure

Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, or equipment.

Dividend Increase

An increase in the amount of payment made by a corporation to its shareholders, usually realized when the company has achieved additional profits.

Additional Financing

Funds that are raised by a company through borrowing or issuing new equity, in addition to its existing capital.

Asset Turnover

A financial ratio that measures the efficiency of a company's use of its assets in generating sales revenue; the higher the turnover, the better.