Which of the Following Can We Learn by Looking at a Firm's

question 1

Multiple Choice

Which of the following can we learn by looking at a firm's short-run costs?

• A) the profit-maximizing level of output
• B) whether the firm will experience economies of scale
• C) the optimal number of employees to hire
• D) whether the firm is earning economic profit
• E) the cost-minimizing level of output

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Definitions:

Risky Asset

A financial instrument whose future returns are uncertain and subject to a wide variety of outcomes.

Capital Allocation Line

A graphical representation used in finance to show possible rates of return for portfolios with different levels of risk.

Lending Rate

The interest rate charged by banks on loans extended to clients.

Borrowing Rate

The interest rate that a borrower is charged for the use of borrowed funds, typically expressed as an annual percentage.