A Firm's Operating Exposure Is

question 93

Multiple Choice

A firm's operating exposure is

• A)defined as the extent to which the firm's operating cash flows would be affected by the random changes in exchange rates.
• B)determined by the structure of the markets in which the firm sources its inputs, such as labor and materials, and sells its products.
• C)determined by the firm's ability to mitigate the effect of exchange rate changes by adjusting its markets, product mix, and sourcing.
• D)all of the above

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Definitions:

Output

The total amount of goods or services produced by a person, machine, factory, country, etc., within a given period.

ATC

Average Total Cost, the sum of all production costs divided by the quantity of output produced, reflecting the average cost per unit of output.

AVC

Average Variable Cost is the total variable cost per unit of output, which is calculated by dividing total variable costs by the quantity of output.

MC

Marginal Cost, the increase or decrease in the total cost of a production run for making one additional unit of an item.