Constant Returns to Scale Exist When Long-Run Average Costs

question 108

Multiple Choice

Constant returns to scale exist when long-run average costs

• A)increase as output is increased.
• B)decrease as output is increased.
• C)remain constant as output is increased.
• D)none of the statements associated with this question are correct.

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Definitions:

Net Cash Flow

The difference between a company's cash inflows and outflows within a specified period.

Time Value of Money

The concept that money available now is worth more than the same amount in the future due to its potential earning capacity.

Compound Interest

Interest calculated on the initial principal, which also includes all of the accumulated interest from previous periods on a deposit or loan.

Payback Period Method

A capital budgeting method that calculates the time required for an investment to generate cash flows to recover its initial cost.