Which of the Following Is True in the Long Run

question 27

Multiple Choice

Which of the following is true in the long run?

• A) Total cost equals fixed cost.
• B) Total cost is constant.
• C) All costs are variable.
• D) Marginal cost equals zero.
• E) None of the above is true in the long run.

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Definitions:

Dividend Reinvestment Scheme

A plan offered by a corporation that allows investors to reinvest their cash dividends by purchasing additional shares or fractional shares on the dividend payment date.

Cash Equivalents

Short-term, highly liquid investments that are readily convertible to known amounts of cash and close to their maturity.

Basis of Measurement

The specific basis chosen to measure various types of assets, liabilities, income, and expenses, such as historical cost, fair value, and amortized cost.

Accrual

An accounting method that records revenues and expenses when they are incurred, regardless of when cash transactions occur.