If Output Is Increased in the Long Run, Average Production

question 33

Multiple Choice

If output is increased in the long run, average production costs in the presence of internal economies of scale will ________, and in the presence of external economies of scale, will ________.

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

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Definitions:

Closing Entries

The journal entries made at the end of an accounting period to transfer the balances of temporary accounts to permanent ones, preparing the books for the next period.

Retained Earnings

Profits that a company keeps to use within the business after dividends have been paid out to shareholders.

Fiscal Year

A one-year period used for financial reporting and budgeting, which may or may not align with the calendar year.

Goods Sold

Goods sold refers to the total quantity of goods that a company has sold to its customers during a specific accounting period.