The Short-Term Cost Function Assumes That

question 24

Multiple Choice

The short-term cost function assumes that

• A) All variable costs are equal.
• B) Fixed costs can be easily changed.
• C) Fixed costs can't be changed.
• D) Variable costs can be fixed.

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Definitions:

Full Capacity

The maximum level of output that a company can produce under normal conditions over a given time period.

EFN

Expected Funds Needed, an estimation of the additional financing a company will require in the future based on its projected growth and existing financial structure.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales and earnings without increasing leverage or debt financing.

Leverage Ratios

Financial metrics that assess the level of debt in a company's capital structure relative to its equity or assets.