If There Are Diseconomies of Scale Within a Given Range

question 30

Multiple Choice

If there are diseconomies of scale within a given range of output,which of following is (are) TRUE?

• A) The short-run average cost curve must be upward sloping within that range of output.
• B) The long-run average cost curve must be upward sloping within that range of output.
• C) Long-run average cost must equal short-run average cost.
• D) All of the above.

---

Definitions:

Negative Covenants

Restrictions in loan agreements that prohibit certain actions by the borrower, intended to protect the interests of the lender.

Debt Covenants

Conditions imposed on borrowers by lenders as part of a loan agreement to protect the lender’s interests by restricting the borrower’s actions.

Earnings Target

A benchmark for financial performance set by a company, reflecting a goal for net income or earnings per share over a specific period.

Accounting Charge

An expense or cost recognized in a company's financial statements.