_____ Are Unit Cost Reductions Associated with a Large Scale

question 13

Multiple Choice

_____ are unit cost reductions associated with a large scale of output.

• A) Comparative advantages
• B) Factor endowments
• C) Economies of scale
• D) Diminishing returns
• E) Absolute advantages

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Definitions:

Discount Rate

The rate employed in discounted cash flow assessments to establish the current valuation of anticipated future cash flows.

Certainty Equivalent Approach

A method used in capital budgeting and investment theory that adjusts future cash flows to account for risk, making them equivalent in value to certain cash flows.

Risky Years

A term not widely recognized in finance; possibly refers to periods of high financial uncertainty or volatility.

Certainty Equivalent Approach

A method of evaluating investments by adjusting future cash flows to reflect the risk, converting them into certain cash flows in present value terms.