A Company May Decide to Invest in a Project Even

question 31

Multiple Choice

A company may decide to invest in a project even if the investment returns less than the cost of capital. The qualitative reasons for doing so include all BUT which of the following?

• A) To improve product quality
• B) To deliver products to customers faster
• C) To increase managers' bonuses
• D) To reduce the number of defective products produced

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Definitions:

Inputs

The resources such as labor, materials, and capital that are used in the production process to create goods and services.

AFC

Acronym that stands for Average Fixed Cost, the fixed costs of production divided by the quantity of output produced.

ATC

Average Total Cost, which is the total cost of production divided by the number of goods produced.

Output

The total amount of goods or services produced by a company, industry, or economy within a specific period.