Which of the Following Actions Might a Firm Take If

question 10

Multiple Choice

Which of the following actions might a firm take if its actual sales growth exceeds its sustainable rate of growth?
I.Increase prices
II.Decrease financial leverage
III.Decrease dividends
IV.Prune away less marginal products

• A) I and II only
• B) I and III only
• C) I, II, and IV only
• D) I, III, and IV only
• E) I, II, III, and IV
• F) None of the above.

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Definitions:

Economic Rent

The excess payment made to a factor of production over and above what is needed to keep it in its current use.

Land

In economics, it refers to all natural resources used to produce goods and services, one of the factors of production.

Profits

The financial gain achieved when the revenues generated from business activities exceed the expenses, costs, and taxes needed to sustain the activity.

Joseph Schumpeter

An economist known for his theory on business cycles and for coining the term "creative destruction" to describe the process of innovation in economics.