Which of the Following Statements Is False

question 41

Multiple Choice

Which of the following statements is false?

• A) Private equity firms often need to borrow the money needed to buy a public corporation.
• B) Once a private equity firm owns a formerly publicly held corporation,they tend to cut costs and enhance efficiency.
• C) Critics of private equity firms say that companies that have too much cash and too little debt become targets for private equity firms to buy.
• D) A private equity firm is a group of investors that takes a privately held corporation and uses an investment banker to turn it into a publicly held corporation.

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Definitions:

Average Total Cost

The cost for each unit produced, found by taking the total cost of producing goods and dividing it by the output quantity.

Production Function

An equation that describes the maximum amount of output that can be derived from a set number of inputs.

Diminishing Marginal Product

The principle that says the marginal product of a factor of production decreases as the quantity of the factor is increased, holding all else constant.

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of production and the cost per unit of production decrease.