Table 68 Elegant Settings Manufactures Stainless Steel Cutlery

question 141

Multiple Choice

Table 6.8
$$\begin{array} { | c | c | } \hline \text { Quantity (sets) } & \begin{array} { c } \text { Long Run } \\\text { Average Cost } \\\text { (dollars) }\end{array} \\\hline 100 & 40 \\\hline 200 & 35 \\\hline 300 & 30 \\\hline 400 & 30 \\\hline 500 & 35 \\\hline\end{array}$$ Elegant Settings manufactures stainless steel cutlery. Table 6.8 shows the company's cost data.
-Refer to Table 6.8.Elegant Settings experiences _________.

• A) economies of scale up to an output level of 400
• B) diminishing returns up to an output level of 400
• C) increasing returns beyond an output level of 400
• D) economies of scale at an output of 300 or less and diseconomies of scale at an output level above 400

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Definitions:

Capital Budgeting

The method of assessing and choosing investments for the long term that align with the company's objective of maximizing wealth.

Straight-Line Depreciation

A method of calculating the depreciation of an asset, dividing the difference between its cost and salvage value evenly over its useful life.

Capital Budgeting

involves the evaluation and selection of long-term investments that are in line with the goal of maximizing the value of a firm.

Incremental Sales

The additional sales generated by a particular business action or decision, reflecting the net increase in sales due to that specific activity.