If a Firm Has an Option to Alter Operating Scale

question 33

Multiple Choice

If a firm has an option to alter operating scale and decides that the operating scale should be altered,either positively or negatively,that decision may be thought of as the:

• A)first step toward the eventual abandonment of the project.
• B)investment of additional funds to increase or decrease production.
• C)decision that must be made at the highest level of the firm.
• D)exercise of the option to alter operating scale.

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Definitions:

Supplier

An entity that provides goods or services, typically in exchange for payment.

Revenue

The total income generated by a firm from its business activities, typically from the sale of goods and services to customers.

Midpoint Method

A technique used in economics to calculate the elasticity of demand or supply by using the average of the initial and final quantities and prices.

Price Elasticity

A measure in economics indicating how the quantity demanded of a good or service changes in response to a change in its price.