If a Firm Decreases Its Operating Costs, All Else Constant

question 51

Multiple Choice

If a firm decreases its operating costs, all else constant, then:

• A)the profit margin increases while the equity multiplier decreases.
• B)the return on assets increases while the return on equity decreases.
• C)the total asset turnover rate decreases while the profit margin increases.
• D)both the profit margin and the equity multiplier increase.
• E)both the return on assets and the return on equity increase.

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Definitions:

Commodities

Goods or services that are traded, often produced to satisfy wants or needs.

Class-in-Itself

A term referring to a social class that shares common economic interests, but may not be united or aware of their shared circumstances or potential for collective action.

Economic Position

An individual's or group's status or rank in the economic hierarchy, determined by wealth, occupation, education, and income.

Use Value

The utility of a commodity in satisfying a need or want, distinct from its exchange value or market price.