Which of the Following Statements Is Correct

question 114

Multiple Choice

Which of the following statements is correct?

• A) A decrease in the firm's marginal corporate tax rate will decrease the weighted average cost of capital.
• B) Flotation costs can decrease the weighted average cost of capital.
• C) The cost of debt is based on the cost of all liabilities, including accounts payable and accruals.
• D) None of these choices are correct.

---

Definitions:

Output Increased

A scenario where production levels rise due to enhanced efficiency, greater demand, or improvements in labor and capital.

Increasing-Cost Industry

An industry in which expansion through the entry of new firms raises the prices firms in the industry must pay for resources and therefore increases their production costs.

Long-Run Supply Curve

As it applies to macroeconomics, a supply curve for which price, but not real output, changes when the demand curves shifts; a vertical supply curve that implies fully flexible prices.

Perfectly Elastic

Describes a situation in which the quantity demanded or supplied changes infinitely with any change in price.