When One Corporation Has Control Over Another Corporation, the Investor

question 81

Multiple Choice

When one corporation has control over another corporation, the investor corporation

• A) is referred to as an associate.
• B) is referred to as the subsidiary.
• C) can determine the investee's strategic operating and financing policies.
• D) must have obtained at least 50% of the investee's issued common shares.

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Definitions:

Long-Run Average Cost

The per-unit cost of production in the long-term, where all input factors are variable, indicating economies or diseconomies of scale.

Upward-Sloping

Describes a line on a graph that demonstrates an increase in value as it moves to the right, often used to represent increases in costs or prices.

Diseconomies of Scale

Diseconomies of scale occur when a company or business grows so large that the costs per unit increase, leading to decreased efficiency.

Diminishing Marginal Returns

A principle stating that as additional units of a variable input are added to a fixed input, the additional output produced from each new unit will eventually decrease.