Assume that firms experience an increase in sales. We would expect that this increase in sales will cause:
A) ambiguous effects on profit per unit of capital.
B) initial increases followed by decreases in profit per unit of capital.
C) an increase in profit per unit of capital.
D) no change in profit per unit of capital.
E) a decrease in profit per unit of capital.

Question

Quizplus · Accepted Answer

An increase in sales will likely lead to economies of scale and potentially increased efficiencies, which should result in increased profit per unit of capital.

Assume That Firms Experience an Increase in Sales