Which of the Following Explains Why Long-Run Average Cost at First

question 414

Multiple Choice

Which of the following explains why long-run average cost at first decreases as output increases?

• A)diseconomies of scale
• B)less-efficient use of inputs
• C)fixed costs becoming spread out over more units of output
• D)gains from specialization of inputs

Understand the relationship between earnings yields, Treasury yields, and stock valuations.

Distinguish between market value and book value and their implications for investment.

Understand the relevance of price-to-sales ratios in different phases of the industry life cycle.

Interpret the market consensus value of the required return on a stock.

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Definitions:

Contra

Contra refers to an account that is used to reduce another account on the financial statements to its net value.

Plant Asset

Long-term tangible assets used in the operation of a business and not intended for resale, such as machinery, buildings, and vehicles.

Loss

The negative result when expenses exceed revenues during a specific period.

Sale

The exchange of goods or services for money or other compensation, forming the primary revenue-generating activity of a business.