A Basic Assumption of the Short Run Is That a Firm

question 44

Multiple Choice

A basic assumption of the short run is that a firm:

• A) can employ more workers and add more capital to the production process.
• B) cannot adjust its workforce or the amount of capital it uses.
• C) can reduce the number of workers it uses, but it cannot adjust how much capital it uses.
• D) can freely adjust the amount of labor and capital that it employs.

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Definitions:

Revenue Recognition Principle

An accounting guideline that determines the specific conditions under which revenue is recognized or accounted for.

Expense Recognition Principle

A core principle of accrual accounting that dictates when expenses are recognized and reported in the financial statements, generally aligning expenses with the revenues they help to generate.

Income Statement

A financial report detailing a company's revenue, cost of goods sold, gross profit, operating expenses, and net income over a specific period.

Managers

Individuals responsible for planning, directing, and overseeing the operations and fiscal health of a business or organization.