A Constant-Cost Industry Is One in Which

question 97

Multiple Choice

A constant-cost industry is one in which

• A) a higher price per unit will not result in an increased output.
• B) if 100 units can be produced for $100, then 150 can be produced for $150, 200 for $200, and so forth.
• C) the demand curve and therefore the unit price and quantity sold seldom change.
• D) the total cost of producing 200 or 300 units is no greater than the cost of producing 100 units.

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Definitions:

Marginal Tax Rate

The rate at which the last dollar of income is taxed, indicating the proportion of additional income that is paid in taxes.

Net Present Value

A financial metric that calculates the difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the liquidity and short-term financial health of the business.

After-tax Cash Inflow

The net amount of cash that remains after all tax obligations have been subtracted from total revenue.