To Avoid the Stock Versus Flow Issue in Production, Some

question 82

Multiple Choice

To avoid the stock versus flow issue in production, some economists discuss capital usage in terms of rented capital. For example, your firm may not directly own some of the capital inputs to your production operation, and these capital inputs are employed on an hourly or daily basis. Which of the following inputs is a good example of a capital input that acts like a flow?

• A) Land and buildings that are owned by the firm
• B) A long-term licensing agreement that allows you to use a patented idea owned by another firm
• C) A forklift that is rented on an hourly basis
• D) all of the above

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Definitions:

Net Loss

A situation where a company's total expenses exceed its total revenues, indicating that the business incurred a loss during a specific period.

Strategic Investments

Investments made with long-term goals in mind, often intended to yield sustainable competitive advantages.

Equity Method

An accounting technique used by a company to record the profits earned through its investment in another company.