In a Short-Run Production Function Before Diminishing Returns Set In

question 2

Multiple Choice

In a short-run production function before diminishing returns set in,

• A)Both MP_L and AP_Lwill have positive slopes and MP_Lwill lie above AP_L
• B)Both MP_L and AP_Lwill have positive slopes and AP_Lwill lie above MP_L
• C)Both MP_L and AP_Lwill have negative slopes and MP_Lwill lie above AP_L
• D)Both MP_L and AP_Lwill have negative slopes and AP_Lwill lie above MP_L

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Definitions:

Return On Equity

A financial ratio that measures the profitability of a business in relation to the amount of equity, indicating how effectively management is using shareholders’ funds.

Payout Ratio

A financial metric showing the proportion of earnings a company pays to its shareholders in the form of dividends.

Sustainable Growth Rate

The maximum rate at which a company can grow its sales, earnings, and dividends without increasing financial leverage.

Retention Ratio

This ratio indicates the percentage of a company's earnings not distributed as dividends but reinvested in the business.