what is the difference between economies of scale and returns to scale quizlet?
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The difference is that economies of scale reflect input proportions that change optimally as output is increased, while returns to scale are based on fixed input proportions (such as two units of labor for every unit of capital) as output increases.
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What is the difference between microeconomics and macroeconomics? ... Microeconomics deals with economics on the level of individuals or businesses, while macroeconomics deals with economics on the level of states or countries.
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Profit is the amount of money your business gains. The difference between gross profit and net profit is when you subtract expenses. Gross profit is your business's revenue minus the cost of goods sold. ... But, your business's other expenses are not included in your COGS.
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ROI deals with the money you invest in the company and the return you realize on that money based on the net profit of the business. Profit, on the other hand, measures the performance of the business. ... Dividing net income, interest, and taxes by total liabilities to measure rate of earnings of total capital employed.
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It explains the long run linkage of the rate of increase in output (production) relative to associated increases in the inputs (factors of production). ... While economies of scale show the effect of an increased output level on unit costs, returns to scale focus only on the relation between input and output quantities.
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The difference between profit margin and markup is that profit margin is sales minus the cost of goods sold; meanwhile, markup is the amount by which the cost is increased on a product to arrive at the selling price.
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ROI tries to directly measure the amount of return on a particular investment, relative to the investment's cost. To calculate ROI, the benefit (or return) of an investment is divided by the cost of the investment. The result is expressed as a percentage or a ratio.
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As nouns the difference between return and revenue is that return is the act of returning while revenue is the income returned by an investment.
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Difference between diminishing returns and dis-economies of scale. Diminishing returns relates to the short run – higher SRAC. Diseconomies of scale is concerned with the long run. Diseconomies of scale occur when increased output leads to a rise in LRAC – e.g. after Q4, we get a rise in LRAC.
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Gross profit margin and operating profit margin are two metrics used to measure a company's profitability. The difference between them is that gross profit margin only figures in the direct costs involved in production, while operating profit margin includes operating expenses like overhead.
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If output increases by less than that proportional change in all inputs, there are decreasing returns to scale (DRS). If output increases by more than the proportional change in all inputs, there are increasing returns to scale (IRS).
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Total return includes interest, dividends, and capital gain, such as an increase in the share price. In other words, a return is retrospective, or backward-looking. ... Yield is the income returned on an investment, such as the interest received from holding a security.
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Diminishing marginal returns is an effect of increasing input in the short run while at least one production variable is kept constant, such as labor or capital. Returns to scale is an effect of increasing input in all variables of production in the long run.
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Profit margin % is calculated by breaking down the item price into cost and profit, whereas ROI focuses on the investment value of a product. Example: You purchased an item for $45, and it was sold at $100.
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An absolute return measures an investment's performance without accounting for the amount of time committed. On the other hand, annualised returns are annual gains that an investment earns over a specific time period.
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Which statements are true regarding economies of scale. A. To maximize profits, a monopoly that occurs because of economies of scale should produce an output so that marginal revenue equals marginal costs.
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That's the difference between a realized and an unrealized gain. A realized gain is the profit from an investment that's actually been sold, as calculated by the difference between an investment's purchase price and sale price. An unrealized gain, by contrast, is simply a gain on paper.