Reports in the Financial Press That a Particular Company Reported

question 30

Multiple Choice

Reports in the financial press that a particular company reported healthy profits despite increased wage costs are indicative of:

• A) the negative impact of reporting payments to employees as expenses while payments to owners are treated as distributions of profits.
• B) the implied emphasis on the returns to owners being good and returns to other stakeholders such as employees as being bad.
• C) the effect of reporting employees as expenses and not reporting the social costs of unemployment on decisions to restructure companies to reduce the workforce.
• D) all of the given answers.

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Definitions:

Marginal Products

The increase in output resulting from a one-unit increase in the quantity of a single input, keeping others constant.

Exponents

Mathematical notation indicating the number of times a number (the base) is multiplied by itself.

Production Function

A model in economics that links physical output of a production process to physical inputs or factors of production.

Returns To Scale

An economic concept describing how the output of a production process changes as the scale of inputs is increased, divided into increasing, constant, or decreasing returns to scale.