Assuming That W and R Are Both Positive,if the Long-Run

question 18

Multiple Choice

Assuming that w and r are both positive,if the long-run expansion path is horizontal,then

• A) MP_K = 0.
• B) MRTS is a function of capital only.
• C) w = r.
• D) All of the above.

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Definitions:

Equity Method

An accounting technique used to assess the profits earned by a company through its investment in another company, recognizing income or loss in proportion to its ownership share.

Consolidated Current Liabilities

The combined total of all short-term financial obligations and debts of a parent company and its subsidiaries, due within one year.

Excess Consideration

The amount paid by an acquiring company over and above the fair value of the net identifiable assets of the acquired company, often recorded as goodwill.

Underlying Book Value

The net asset value of a company calculated by total assets minus intangible assets (patents, goodwill) and liabilities.