On the Downward Sloping Portion of a Firm's Long-Run Average

question 315

Multiple Choice

On the downward sloping portion of a firm's long-run average cost curve, it is experiencing

• A) economies of scale.
• B) constant returns to scale.
• C) diseconomies of scale.
• D) diminishing marginal returns.

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Definitions:

Operating Assets

Assets used in the day-to-day operations of a business to generate income.

Net Operating Income

A company's operating profit after subtracting operating expenses from gross profit, excluding taxes and interest payments.

Reduction In Expenses

Actions or strategies implemented by an organization aimed at decreasing its total costs or expenditures to improve profitability.

Residual Income

Represents the amount of income that an investment generates above the minimum rate of return.