The Finding from Surveys of the Methods of Business Investments

question 66

Multiple Choice

The finding from surveys of the methods of business investments that is true is:

• A)businesses generally only use one method to assess each investment decision.
• B)there is a tendency for larger businesses to use the discounting methods.
• C)the payback method is hardly used in practice.
• D)All of the statements are true.

---

Definitions:

Economies of Scale

The cost advantage that arises with increased output of a product, as the fixed costs are spread over more units of production.

Adam Smith

An 18th-century Scottish economist and philosopher, best known for his theories of the free market and the "invisible hand" guiding economies.

Diseconomies of Scale

Diseconomies of scale occur when a firm's costs per unit increase as it produces more units, due to inefficiencies.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output decreasing with increasing scale.