A Constant-Cost Industry Is One in Which

question 50

Multiple Choice

A constant-cost industry is one in which

• A) resource prices fall as output is increased.
• B) resource prices rise as output is increased.
• C) resource prices remain unchanged as output is increased.
• D) small and large levels of output entail the same total costs.

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Definitions:

Risk Free Asset

An investment that is expected to return its original value without any loss and with a certain rate of interest; considered to have zero default risk.

Rate of Return

The increase or decrease in the value of an investment during a set time frame, represented as a proportion of the investment's original price.

Level of Risk

The degree of uncertainty associated with an investment or decision, often regarding the potential for loss.

Optimal Portfolio

An investment strategy that maximizes expected return for a given level of risk through diversification.