The Construct of a Representative Firm Is Most Helpful in Describing

question 65

Multiple Choice

The construct of a representative firm is most helpful in describing the behavior of all of the firms in the economy when

• A) there are constant returns to scale.
• B) there are increasing returns to scale.
• C) there are decreasing returns to scale.
• D) the marginal product of labor is increasing in the amount of labor input.

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Definitions:

Debt-To-Equity Ratio

A financial metric that shows the comparative amount of equity and debt a company utilizes to fund its assets.

Financial Statements

Financial statements are formal records of the financial activities and position of a business, person, or other entity, typically comprising the balance sheet, income statement, and cash flow statement.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets.

Liquidity

The simplicity of converting an asset or security into cash without impacting its market value.