Firms in Need of Financing Tend to Use External Funds

question 64

True/False

Firms in need of financing tend to use external funds first and then revert to internal funds,or retained earnings,as a last resort.

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Definitions:

MRP Curve

A graphical representation showing the additional revenue generated by employing one more unit of a resource, also known as the Marginal Revenue Product curve.

Wage Rates

The amount of compensation paid to employees for their labor, typically expressed per hour or year.

Labor Supply Curve

A graphical representation showing the relationship between the quantity of labor that workers wish to supply and the wage rate.

Substitution Effect

The change in consumption patterns due to a change in the relative prices of goods, leading consumers to replace more expensive items with cheaper substitutes.