The Local Allied Moving Company Begins This Year with Capital

question 148

Multiple Choice

The local Allied Moving Company begins this year with capital equal to $250,000.During the year the firm depreciates $150,000 worth of its capital and ends the year with capital equal to $250,000.Which statement correctly summarizes Allied Moving Company's investment?

• A) Allied Moving Company made no capital investment during the year.
• B) Allied Moving Company made no gross investment during the year.
• C) Allied Moving Company made no net investment during the year.
• D) Allied Moving Company made net investment of $150,000 during the year.
• E) Allied Moving Company made gross investment of $250,000 during the year.

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Definitions:

Long-run Average Total Cost

The per unit cost of production when all inputs, including capital, are variable, assuming optimal efficiency.

Economies of Scale

Describe the cost advantages that enterprises obtain due to the scale of their operations, typically resulting in reduced costs per unit with increased output.

Long-run Average Total Cost

The average cost per unit of output when all inputs, even physical capital, are adjustable, over a sufficient time period.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, characterized by a reduction in average cost per unit when output is increased.