If a Firm's Average Total Cost Falls in the Long

question 68

Multiple Choice

If a firm's average total cost falls in the long run over a certain range of output, then:

• A)it is subject to economies of scale over that range of output.
• B)it is subject to diseconomies of scale over that range of output.
• C)it is subject to constant returns to scale over that range of output.
• D)it has reached the minimum efficient scale of production.
• E)it has reached the minimum efficient scale of production

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Definitions:

Net Present Value

Net Present Value (NPV) is a financial measurement that calculates the current value of expected future cash flows from an investment, adjusted for time and interest.

Average Accounting Return

A financial ratio that calculates the average annual income from an investment compared to its initial cost.

Required Rate Of Return

The minimum return an investor expects to receive on an investment, taking into account its risk level.

Cash Flows

The net amount of cash and cash-equivalents moving into and out of a business.