When Increasing Its Output Results in Falling Costs, a Firm

question 85

Multiple Choice

When increasing its output results in falling costs, a firm that can adjust all inputs is experiencing

• A) diseconomies of scale.
• B) economies of scale.
• C) loss.
• D) capital gains.

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Definitions:

Estimated Obligations

The predicted liabilities or commitments a company expects to incur in the future, often found in financial planning and budgetary processes.

Overreserving

Overreserving refers to setting aside more funds or reserves than necessary for anticipated obligations or liabilities, which can affect a company's financial statements by overstating expenses.

Prior Period Adjustment

Adjustments made to a company's financial statements to correct errors or misstatements in previously issued financial reports.

Retained Earnings Balance

The amount of net earnings left in a company after dividends have been paid out to shareholders, which is used for reinvestment in the business or to pay down debt.