An Example of a Liquidity Ratio Is

question 31

Multiple Choice

An example of a liquidity ratio is

• A) fixed asset turnover.
• B) current ratio.
• C) acid test or quick ratio.
• D) fixed asset turnover and acid test or quick ratio.
• E) current ratio and acid test or quick ratio.

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Definitions:

Increasing Returns to Scale

A situation in which a proportionate increase in all inputs leads to a greater proportional increase in output, indicating improved production efficiency.

Diminishing Marginal Returns

A principle stating that if one factor of production is increased while others remain constant, the overall returns will gradually decrease after a certain point.

Long-Run Average Cost Curves

A graphical representation showing the average cost per unit of output over a long period, where all inputs, including capital, are variable.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to a reduction in average costs per unit as output increases.