In the Long Run,decreasing Returns to Scale Are Likely to Be

question 3

Multiple Choice

In the long run,decreasing returns to scale are likely to be caused by

• A)diseconomies of scale associated with management problems.
• B)a decrease in factor prices.
• C)increasing specialization of labour.
• D)diminishing returns to the variable factor.
• E)decreasing costs.

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Definitions:

Leverage Levels

The degree to which a business or investor is utilizing borrowed money.

EPS

Earnings Per Share, a company's profit divided by its number of outstanding shares of common stock, indicating how much money each share earns.

EBIT

The measure known as Earnings Before Interest and Taxes determines a company's profit levels by excluding interest and tax-related expenses.

Financial Leverage

The use of borrowed funds with the intent to increase the return on equity.