The Table Given Below Shows the Average Total Cost of Production

question 82

Multiple Choice

The table given below shows the average total cost of production of a firm at different levels of the output.Table 8.5

-According to economic theory, the difference between the long run and the short run is:

• A)about two months.
• B)about two years.
• C)not relevant for executive decision makers.
• D)strictly theoretical so that in practice there is no difference between them.
• E)the ability for a firm to vary all resources.

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Definitions:

Financial Leverage

The use of borrowed money (debt) to amplify the potential returns from an investment.

EBIT-EPS Analysis

A tool used to determine the impact of different levels of debt on a company's earnings before interest and tax (EBIT) and earnings per share (EPS).

Leverage

The use of borrowed funds to finance the purchase of assets or increase the potential return of an investment.

Management Effectiveness

A measure of how well a company's management team utilizes resources to generate profits.