The Bootstrap Purchase of Assets

question 74

Multiple Choice

The bootstrap purchase of assets:

• A) is a direct purchase of the entire assets of a firm.
• B) means the entrepreneur purchases a small percentage of a firm for cash.
• C) frequently results in a long-term capital gain to the seller.
• D) results in double taxation.

---

Definitions:

Capital-labor Ratio

The ratio of capital (equipment, buildings, etc.) to labor (workforce) in an economic analysis or production process.

Annual Output

The total production or output of a good or service in a year.

Capital-labor Ratio

The ratio of the total capital employed by a firm to the number of its labor force, indicating the amount of capital used per worker.

Production Function

Function showing the highest output that a firm can produce for every specified combination of inputs.