If Output Is Increased in the Long Run, Then in the Presence

question 30

Multiple Choice

If output is increased in the long run, then in the presence of internal economies of scale the number of firms will ________, and in the presence of constant external returns to scale the number of firms will ________.

• A) decrease; decrease
• B) increase; remain constant
• C) remain constant; increase
• D) decrease; remain constant
• E) increase; decrease

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Definitions:

Public Sector Accounting Board

A body responsible for setting accounting standards for governmental and other public sector entities.

Tax Revenue

Income that the government receives from taxpayers, including both individuals and businesses, used to fund public services and obligations.

Tax Concessions

Special exemptions, deductions, or credits provided in the tax code to encourage certain business activities or investments.

Qualitative Characteristics

The attributes that make the information provided in financial statements useful to users, such as relevance and reliability.