Which of the Following Explains Most Clearly Why Business Owners

question 37

Multiple Choice

Which of the following explains most clearly why business owners have a strong incentive to strive for operational efficiency?

• A) They recognize that operational efficiency promotes the public interest.
• B) As residual claimants, owners will receive a higher income from increased efficiency.
• C) The owners will be able to keep production costs low by providing free managerial services to the firm.
• D) The owners will be able to gain by paying employees below market wages, which will improve the overall efficiency of the economy.

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Definitions:

Long-run Average Total Cost

The per unit cost of production when all inputs, including both fixed and variable costs, are adjusted to their optimal levels over time.

Automobile Manufacturing

The industry and process involved in designing, producing, marketing, and selling motor vehicles.

Ford Motor Company

An American multinational automaker founded by Henry Ford, known for revolutionizing the automobile industry.

Constant Returns to Scale

A condition where increasing all inputs by the same proportion results in an increase in output by that same proportion.