Which of the Following Statements Would Be True About a Firm

question 66

Multiple Choice

Which of the following statements would be true about a firm that is operating under conditions of excess capacity?

• A)The firm's average total cost would be at a minimum.
• B)The firm's average total cost would not be at a minimum.
• C)The firm's average total cost may or may not be at a minimum,but the firm would not be at capacity output.
• D)The firm would not be at capacity output,but its average total cost would be at a minimum.
• E)The firm would need to reduce output to achieve minimum average total cost.

---

Definitions:

Discount Rate

In the realm of discounted cash flow analysis, this is the interest rate used for estimating the present value of future financial inflows.

Anticipated Annual Incremental

Expected yearly increases in revenue or benefits as a result of a particular action or investment, not considering future inflation or changes in currency value.

Salvage Value

The anticipated market value of an asset after its period of utility has ended.

Payback Period

The duration required for an investment to produce income or cash flow that matches the investment's initial cost.