It Is Assumed in Standard Economic Theory That a Firm

question 116

Multiple Choice

It is assumed in standard economic theory that a firm makes decisions in an effort to

• A) become as large as possible.
• B) have a highly diversified product.
• C) maximize its profits.
• D) maximize its revenue.
• E) be favoured politically.

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Definitions:

Capital Budgeting

The method of assessing and choosing long-term investment opportunities that align with the objective of maximizing shareholder wealth.

Straight-Line Depreciation

A way of spreading the financial load of a tangible good across its effective lifespan in consistent yearly portions.

Capital Budgeting

The process of evaluating and selecting long-term investments compatible with the firm's goal of wealth maximization.

Straight-Line Depreciation

Involves evenly spreading the expense of an asset over its estimated useful life.