A Real Option Can Present Management with the Opportunity to

question 61

Multiple Choice

A real option can present management with the opportunity to

• A)vary output.
• B)abandon a project.
• C)postpone a project.
• D)All of the above

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Definitions:

Optimum Operating Level

The level of operation at which a company or system achieves its best performance in terms of efficiency and cost-effectiveness.

Diseconomies Of Scale

Diseconomies of Scale arise when a company or business grows so large that the costs per unit increase, leading to inefficiency and increased production costs.

Utilization

The ratio of the actual output of a facility to its potential output under full capacity, usually expressed as a percentage.

Efficiency

Actual output as a percent of effective capacity.