Constant Returns to Scale Cause the Long-Run Average Cost Curve

question 60

Multiple Choice

Constant returns to scale cause the long-run average cost curve to be:

• A) horizontal.
• B) vertical.
• C) upward-sloping.
• D) downward-sloping.

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Definitions:

Drawing Account

An account used to record withdrawals made by a company’s owner for personal use, which is then deducted from the company’s capital.

Owner's Capital Account

Represents the total equity or net worth of an individual owner in a company, detailing the contributions, earnings, and withdrawals of the owner.

Income Statement

A financial statement that shows a company's revenues and expenses over a specific period, leading to the net income or loss for the period.

Recording Process

The systematic method of capturing and documenting financial transactions in the accounting records of an entity.