If a Firm Has a Debt-Equity Ratio of 1

question 5

Multiple Choice

If a firm has a debt-equity ratio of 1.0,then its total debt ratio must be which one of the following?

• A)0.0
• B)0.5
• C)1.0
• D)1.5
• E)2.0

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Definitions:

Average Total Cost

Represents the per-unit total cost of production, calculated by dividing the total cost by the total quantity produced.

Falling

The process or action of moving downwards, typically used in economics to describe a decrease in prices or values.

Short Run

In economics, the short run refers to a period during which at least one of a firm's inputs cannot be changed, limiting its capacity to adjust to demand changes.

Long Run

A period during which all factors of production and costs are variable, allowing full adjustment to any change in market conditions.