Which Provision Could Best Be Justified as Encouraging Small Business

question 49

Multiple Choice

Which provision could best be justified as encouraging small business?

• A)Ordinary loss allowed on § 1244 stock.
• B)Percentage depletion.
• C)Domestic production activities deduction.
• D)Interest deduction on home mortgage.
• E)None of the above.

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Definitions:

Diminishing Marginal Product

The principle that as more of a variable input is added to a fixed input, the additional output produced from each new unit of input will eventually decrease.

Production Function

A production function describes the relationship between inputs used in production and the output generated from those inputs.

Marginal Product

The additional output gained by adding one more unit of a specific input, keeping all other inputs constant.

Profitability

A measure of the ability of a company or a business sector to generate earnings compared to its expenses and other relevant costs incurred during a specific period of time.