Returns to Scale Refers to the Change in Output When

question 108

Multiple Choice

Returns to scale refers to the change in output when

• A) all inputs increase proportionately.
• B) labor increases holding all other inputs fixed.
• C) capital equipment is doubled.
• D) specialization improves.

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Definitions:

Capital Budgeting

The process by which investors or management assess potential large expenditures or investments to determine their profitability.

Internal Rate of Return (IRR)

The discount rate that makes the net present value (NPV) of all cash flows from a particular project equal to zero.

Initial Investment

The initial amount of money required to start a project, investment, or business, often used to assess its feasibility and potential return.

Negative Cash Flow

A situation where a business or individual's outflows of cash exceed their incoming cash, indicating potential financial trouble.