Which of the Following Statements Is False

question 60

Multiple Choice

Which of the following statements is false?

• A) The data show a clear preference for equity as a source of external financing for the total population of U.S. firms.
• B) Debt as a fraction of firm value has varied in a range from 30-45% for the average firm.
• C) Capital expenditures greatly exceed firms' external financing, implying that most investment and growth is supported by internally generated funds, such as retained earnings.
• D) Firms in growth industries like biotechnology or high technology carry very little debt, whereas airlines, auto makers, utilities, and financial firms have high leverage ratios.

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Definitions:

Most Efficient Output

The level of production at which a firm or economy can produce goods at the lowest average cost, maximizing the use of resources.

ATC Curve

The Average Total Cost Curve, which represents the average cost per unit of output over various levels of production, illustrating how costs change with output levels.

AVC Curve

The average variable cost curve, which plots the variable cost per unit of output at different levels of production.

Perfect Competitor's Firm

A company operating in a market where no single firm can influence price, and all firms sell identical products.