Economies of Scale

question 163

Multiple Choice

Economies of scale

• A) only occur in the short run.
• B) lead to lower average costs in the long run.
• C) are possible only for large corporations.
• D) suggest that the firm is producing too much of a good.

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Definitions:

Return on Total Assets

A profitability ratio that measures the net income produced by the total assets of a company during a period, indicating how efficiently a company uses its assets to generate earnings.

Long-term Investment Transactions

Long-term Investment Transactions involve the buying or selling of investments, such as stocks, bonds, or real estate, intended to be held for a period longer than a year for capital gains or investment income.

Journal Entries

Recorded transactions in the accounting books of a business, capturing all the financial activities and their effects on the company's financial position.

Operating Cycle

The period of time it takes for a company to purchase inventory, sell it to customers, and collect the cash from the sale.