Economic Value Added Is Defined As

question 43

Multiple Choice

Economic value added is defined as:

• A)the same as accounting profit.
• B)total revenue less total explicit costs.
• C)accounting profit net of the minimum return on invested capital demanded by the firm's investors.
• D)the same as economic profit.

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Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale as fixed costs are spread out over more units of output.

Unit Costs of Production

The total expense incurred by a company to produce, store, and sell one unit of a particular product or service.

Diseconomies of Scale

The condition in which a firm’s costs per unit of output increase as the firm increases in size or scale of operation.