The Negatively-Sloped Part of the Long-Run Average Total Cost Curve

question 33

Multiple Choice

The negatively-sloped part of the long-run average total cost curve is due to which of the following?

• A)Diseconomies of scale.
• B)Diminishing returns.
• C)The difficulties encountered in coordinating the many activities of a large firm.
• D)The increase in productivity that results from specialization.

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Definitions:

Operating Assets

Assets used in the daily operations of a business to generate revenue, such as plant, equipment, inventory, and receivables.

Residual Income

The income that an entity generates after accounting for the cost of capital, showing what is effectively left over for shareholders.

Centralized Organizations

Organizations where decision-making authority is concentrated at the top levels of management, with lower levels primarily responsible for implementing decisions.

Business Segments

Divisions within a company that operate in different types of markets or industries, each with its own specific financial and operational strategies.