Suppose a Firm Doubles Its Output in the Long Run

question 26

Multiple Choice

Suppose a firm doubles its output in the long run. At the same time the unit cost of production remains unchanged. We can conclude that the firm is

• A) exploiting the economies of scale available to it.
• B) facing constant returns to scale.
• C) facing diseconomies of scale.
• D) not using the available technology efficiently.

Grasp the implications of a stock split, stock dividend, and the concept of retained earnings in corporate finance.

Understand the regulatory and legal framework surrounding the corporate form of business organization, including the concepts of limited liability and continuous existence.

Understand the process and implications of closing net income or loss to retained earnings or contributed surplus.

Recognize the definition and implications of a deficit in the Retained Earnings account.

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Definitions:

Bandura's Theory

A rephrased definition: The theory by Albert Bandura that emphasizes the importance of observational learning, imitation, and modeling in acquiring new behaviors and attitudes.

Personalities

The distinctive patterns of thoughts, feelings, and behaviors that make up an individual's character, influencing how they interact with the world.

Self-Regulation

The ability to control or redirect one's own emotions and desires or the capacity to manage one's impulses, often to achieve long-term goals.

Observational Learning

A learning process where individuals learn new behaviors or information by watching others.