In the Long Run When an Increase in the Quantity

question 133

Multiple Choice

In the long run when an increase in the quantity of output increases average total cost,this is called:

• A) economies of scale.
• B) diseconomies of scale.
• C) constant economies to scale.
• D) minimum average total cost.

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Definitions:

Maturity Value

The total amount of principal and interest due to be paid at the end of a loan or investment period.

Compounded Semi-annually

Interest that is calculated and added to the principal amount twice a year, leading to interest being earned on interest.

Strip Bond

A type of bond where the coupon payments have been separated from the principal, allowing them to be sold independently as zero-coupon bonds.

Discount Rate

The interest rate charged by central banks for loans to commercial banks or the rate used in discounted cash flow analysis to determine present value.