A Firm Experiences _______ When Its _______ Downward as Output

question 73

Multiple Choice

A firm experiences _______ when its _______ downward as output increases.

• A) economies of scale; long- run average cost curve slopes
• B) diminishing marginal returns; long- run average cost curve slopes
• C) diminishing marginal returns; average total cost curve shifts
• D) diseconomies of scale; average total cost curve slopes

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Definitions:

Net Present Value (NPV)

The calculation of the current value of a series of future cash flows generated by an investment, minus the initial cost of the investment.

International Fisher Effect

A theory stating that the difference in nominal interest rates between two countries is equal to the expected change in the exchange rate between the two countries' currencies.

Absolute Purchasing Power Parity

The concept that, if transportation and transaction charges are eliminated, the price of identical items should be equivalent across countries when converted into a uniform currency.

Exchange Rate

The price at which one currency can be exchanged for another currency, influencing international trade and investment.