If a Firm's Long-Run Average Total Curve Shows That It

question 81

Multiple Choice

If a firm's long-run average total curve shows that it can produce 5,000 DVDs at an average cost of $2.00 and 15,000 DVDs at an average cost of $1.50, this is evidence of

• A)diminishing returns.
• B)economies of scale.
• C)diseconomies of scale.
• D)the law of supply.

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Definitions:

Assets

Resources owned by a company, regarded as having value and available to meet debts, commitments, or legacies.

Invest

The action of allocating resources, usually financial, with the expectation of achieving a profit or material result.

ESOPs

Employee Stock Ownership Plans; these provide company stocks to employees as part of a retirement plan or incentive program.

Tax Advantages

Financial benefits derived from certain investments or transactions that are treated favorably by tax laws, reducing tax liability.