A Subsidiary Is Defined as an Entity That Is Controlled

question 37

Multiple Choice

A subsidiary is defined as an entity that is controlled by another company. Three criteria must be present in order for there to be control. The parent must have all of the following except:

• A)The ability to direct the financial and operating policies of another company.
• B)The ability to obtain returns from another company.
• C)The ability to use its power to affect the returns from another company.
• D)The ability to issue any class of securities in a public market on behalf of another company.

---

Definitions:

Labor Curve

A graphical representation showing the relationship between the quantity of labor supplied and the wage rate.

Diminishing Returns

A principle stating that the addition of more of one factor of production, holding all else constant, will at some point yield lower incremental per-unit returns.

Marginal Product

The additional output resulting from the use of one more unit of a variable input, holding other inputs constant.

Cookie Production

The process of baking cookies, which involves mixing ingredients according to a recipe, shaping, and then heating them in an oven until done.