The Figure Given Below Shows Three Short Run Average Total

question 94

Multiple Choice

The figure given below shows three Short Run Average Total Cost (SRATC) curves and the Long Run Average Total Cost (LRATC) curve of a firm. Figure 7.3
- Which of the following would account for the shape of the long-run average-total-cost curve in Figure 7.3?

• A)Low worker morale
• B)Low productivity
• C)Administration overhead
• D)Specialization of labor
• E)Managerial problems

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Definitions:

Asset Utilization

A metric that measures how efficiently a company uses its assets to generate revenue or achieve its business goals.

After-tax Interest Expense

The interest expense on debt after accounting for the effects of income tax savings.

EBI

Earnings Before Interest, a profitability measure that calculates a company's earnings before any interest expenses are deducted.

Differentiation Strategy

A business approach where a company develops unique products or services to stand out from competitors.