An Increase in the Level of Technology Shifts

question 317

Multiple Choice

An increase in the level of technology shifts

• A) both the SAS and LAS curves rightward.
• B) both the SAS and LAS curves leftward.
• C) the SAS curve rightward but leaves the LAS unchanged.
• D) the LAS curve rightward but leaves the SAS curve unchanged.

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Definitions:

Financial Leverage

Leveraging borrowed capital to enhance the expected returns of an investment, thereby also magnifying the potential for loss.

Homemade Leverage

A strategy where investors adjust their financial leverage individually rather than relying on the company's capital structure, often through borrowing or lending funds personally.

Target Ratio

A specific goal for a financial metric that a company aims to achieve, often related to financial health or performance ratios.

WACC

Weighted Average Cost of Capital; a computation that determines a company's capital cost by proportionally weighting each category of capital.