In the Long Run, a Firm Will Choose a Plant

question 211

Multiple Choice

In the long run, a firm will choose a plant size that has the

• A)minimum of average fixed costs.
• B)capacity to produce the largest quantity of the product.
• C)minimum average total cost of producing the target level of output.
• D)maximum level of resource use per unit of the total product of output.

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Definitions:

Retained Earnings

The portion of a company's profits that is not distributed as dividends to shareholders but is kept for reinvestment in the business or to pay debt.

Balance Sheet

Financial report presenting the total assets, liabilities, and equity of a company at a certain date, used to assess its financial stability and operational efficiency.

Assets

Assets are resources owned by a company that have economic value and can be used to meet debts, commit to investments, or generate income.

Liabilities

Future sacrifices of economic benefits that the entity is presently obliged to make to other entities as a result of past transactions or events.