Positive NPV Projects May Originate from Cost Saving Projects Such

question 163

Multiple Choice

Positive NPV projects may originate from cost saving projects such as those that

• A)reduce economies of scale.
• B)create product differentiation.
• C)reduce absolute cost advantages.
• D)fail to exploit advantages in distribution channels.
• E)none of the above statements are correct

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Definitions:

Rising

An increase or upward trend in value, quantity, or importance.

Average Variable Cost

The total variable cost divided by the number of units produced, representing the variable cost per unit of output.

Average Fixed Cost

The fixed costs (costs that do not change with the level of output) of producing a good or service, divided by the quantity of output produced.

Total Cost

The entire cost of production, including both fixed and variable costs.