If One Company Owns More Than 50% of the Ordinary

question 12

Multiple Choice

If one company owns more than 50% of the ordinary shares of another company,

• A) the cost method should be used to account for the investment.
• B) a partnership exists.
• C) a parent-subsidiary relationship exists.
• D) the company whose shares are owned must be liquidated.

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Definitions:

Marginal Product

The additional output obtained by employing one more unit of a variable factor of production, holding all other inputs constant.

Total Product

The sum of all products or services generated by a company or economic system within a defined timeframe.

Average Product

The output per unit of input, calculated by dividing the total product (output) by the total quantity of input used.

Isoquant Curve

A graph showing different combinations of inputs that produce the same level of output, illustrating the trade-offs in input usage.