When a business expands production and increases sales, what generally happens to revenue?
A. It depends on whether the firm has increasing or diminishing marginal revenue.
B. Revenue falls because costs also rise.
C. Revenue rises because the business is selling more output.
D. Revenue is unaffected by the level of production or the number of sales.
Answer: C
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Fixed fee contracts are desirable when there is little uncertainty regarding the output
a. True b. False
For many firms, capital is the production input that is typically fixed in the short run. Which of the following firms would face the longest time required to adjust its capital inputs?
A) Firm that makes DVD players. B) Computer chip fabricator C) Flat-screen TV manufacturer D) Nuclear power plant
Capital expenditures:
a. are easily reversible b. are forms of operating expenditures c. Affect long-run future profitability d. Involve only money, not machinery e. none of the above
Assume that a one-year Malaysian bond yields 10 percent interest and that the dollar return on maturity is 5 percent. If the exchange rate at maturity is $1 = MYR 4.00 (Malaysian ringgit), what was the exchange rate at the time the bond was purchased?
a. $1 = MYR 4.2 b. $1 = MYR 3.8 c. $1 = MYR 3.6 d. MYR 1 = $0.26 e. MYR 1 = $0.4