If Long-Run Average Total Cost Decreases as Output Increases, This

question 141

Multiple Choice

If long-run average total cost decreases as output increases, this is due to

• A)declining average fixed costs.
• B)the law of diminishing returns.
• C)economies of scale.
• D)externalities.

Distinguish between direct and indirect costs, and their impact on product costing and pricing.

Comprehend the principles of customer orientation and its effect on production systems.

Grasp the importance and implementation of the balanced scorecard approach.

Identify the characteristics of direct and indirect costs in the context of cost objects.

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Definitions:

Absolute Purchasing Power Parity

A theory that suggests that in the absence of transaction costs and barriers to trade, identical goods should have the same price in different countries.

Forward Exchange Rate

The predetermined rate at which two currencies will be exchanged at a future date.

International Fisher Effect

The International Fisher Effect is a theory that suggests differences in nominal interest rates in different countries are directly proportional to changes in the exchange rate between their currencies.

Spot Exchange Rate

The current exchange rate at which one currency can be immediately exchanged for another currency.