In the Short Run, Plants May

question 20

Multiple Choice

In the short run, plants may

• A) change plant capacity.
• B) face new competitors.
• C) hire more workers.
• D) change plant capacity, face new competitors, and hire more workers.

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Definitions:

Required Return

The minimum expected return investors demand for investing in a security or project.

Unlevered Return

A return on investment that doesn't account for debt, measuring the performance of an investment as if no borrowing took place.

Cost of Equity

The return a firm theoretically pays to its equity investors to compensate them for the risk they undertake by investing in the company.

Total Debt

The sum of all short-term and long-term liabilities owed by an entity.