A Firm with Increasing Returns to Scale Would See

question 67

Multiple Choice

A firm with increasing returns to scale would see:

• A) decreasing long-run marginal costs.
• B) increasing long-run marginal costs.
• C) constant long-run marginal costs.
• D) More information is necessary to determine the answer.

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Definitions:

Equity Method

An accounting technique used for recording investments in associate companies where the investment is initially recognized and subsequently adjusted for the investor’s share of the net assets of the investee, including recognized income or loss.

Cost Method

An accounting method used to record investments in which the investment is recorded at its acquisition cost without recognizing subsequent changes in market value.

Investment Method

A technique for recognizing the investor's share of investee profits and adjusting the carrying amount of the investment accordingly.

Accounting

The systematic process of recording, summarizing, and reporting the financial transactions and positions of a company.