If the Average Total Cost of Producing 20 Sweaters an Hour

question 100

Multiple Choice

If the average total cost of producing 20 sweaters an hour falls when the firm doubles all its inputs, then the

• A) firm moves along its short- run average total cost curve.
• B) short- run average total cost curve shifts upward because all inputs have increased.
• C) long- run average cost curve shifts downward.
• D) firm experiences economies of scale.

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Definitions:

Operating Cash Flow

Operating Cash Flow refers to the cash generated from a company’s normal business operations, indicating whether a company is able to generate sufficient positive cash flow to maintain and grow its operations.

Long-term Solvency

A measure of a company's ability to meet its long-term financial obligations, indicating its financial health and stability over time.

Interest Coverage

A financial metric used to determine how easily a company can pay interest expenses on outstanding debt with its before-tax income.

Quick Ratios

A liquidity metric that measures a company's ability to cover its current liabilities with its most liquid assets, excluding inventory.