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:

Management Reserves

Budgetary allocations set aside for unforeseen changes in the scope and cost of a project.

Contingency Reserves

Allocated budget within a project to address unforeseen costs or risks that may arise.

Budget Baseline

A reference point in the project budgeting process that represents the approved plan for project expenditure, against which actual costs are measured.

Internal Rate Of Return

Internal Rate of Return (IRR) is a financial metric used to evaluate the profitability of potential investments by calculating the rate of return that sets the net present value of all cash flows to zero.