Higher Capital Utilization Rates May Raise the User Costs of Capital

question 47

Multiple Choice

Higher capital utilization rates may raise the user costs of capital because higher utilization rates may imply:

• A)operating at inconvenient times.
• B)paying overtime to employees operating the machines.
• C)operating when complementary services like transporters are unavailable or more expensive.
• D)all of the above.

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Definitions:

Historical Cost Principle

An accounting principle that states that assets should be recorded and reported at their original purchase cost.

Stock Investments Account

An account on the balance sheet that represents the cost of buying and holding shares of another company.

Brokerage Fees

Charges paid to a broker for executing transactions or providing specialized services.

New York Stock Exchange

A leading global securities exchange where stocks and other securities are bought and sold.