The Decision to Invest in Capital Is Taken on the Basis

question 25

True/False

The decision to invest in capital is taken on the basis of a comparison between the current cost of investment and the future benefit from it.

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Definitions:

Marginal Costs

The additional cost incurred in producing one more unit of a good or service.

Average Revenue

The amount of income generated per unit of output, calculated by dividing total revenue by the number of units sold.

Average Total Costs

The total costs of production (fixed and variable costs) divided by the number of units produced, showing the cost per unit.

Pure Monopoly

A market structure in which a single seller controls the entire supply of a product or service, and therefore can manipulate prices and conditions of sale.