Which Assumption Is Often Realistic for a Firm in the Short

question 15

Multiple Choice

Which assumption is often realistic for a firm in the short run

• A)The firm can vary both the size of its factory and the number of workers it employs.
• B)The firm can vary the size of its factory, but not the number of workers it employs.
• C)The firm can vary the number of workers it employs, but not the size of its factory.
• D)The firm can vary neither the size of its factory nor the number of workers it employs.

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Definitions:

Fair Value Method

An accounting approach that assesses assets and liabilities at their current market value rather than historical cost.

Equity Method

An accounting technique used by firms to assess the profits earned through their investments in other companies, recognizing income in proportion to ownership.

Gross Profit

The difference between revenue and the cost of goods sold before expenses are subtracted.

Intra-entity Sales

Transactions of goods or services that occur between divisions or subsidiaries within the same parent company, impacting consolidated financial statements.