In Some Industries, Like Insurance, Both Small and Very Large

question 63

Multiple Choice

In some industries, like insurance, both small and very large firms coexist and compete quite effectively in the market. This indicates that the long-run average total cost curve in these industries

• A) is "U" shaped.
• B) is downward sloping over all levels of output.
• C) exhibits constant returns to scale over a wide range of output.
• D) exhibits diseconomies of scale beginning at a low rate of output.

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Definitions:

Personal Tax Rate

The percentage of an individual's income that is paid to the government in taxes.

Corporate Tax Rate

The percentage of a corporation's income that is paid to the government as tax.

Leverage Value

Refers to the use of financial leverage or borrowing to increase the potential return of an investment, enhancing the value for shareholders.

Free Cash Flows

The amount of cash a company generates after accounting for capital expenditures needed to maintain or expand its asset base.