When a Company Invests a Lot of Money in a Particular

question 81

Multiple Choice

When a company invests a lot of money in a particular project,it is concerned about the amount of risk involved.In general,the longer the expected life of a project or asset,the potential risk is

• A) lesser.
• B) constant.
• C) greater.
• D) unchanged.
• E) nonexistent.

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Definitions:

Constant-Cost Industry

An industry in which the input prices and production costs remain constant as the industry output changes.

Long-Run Equilibrium

A state in which all firms in an industry are producing at their minimum long-run average cost and are earning normal profits.

Units of Output

The measurable amount of goods or services produced by a company or industry.

Internal Economies of Scale

cost advantages that a firm obtains due to expansion, leading to a decrease in the average cost per unit.