When Consistent Assumptions Are Used,we

question 31

Multiple Choice

When consistent assumptions are used,we

• A)get the same value for equity under the enterprise and equity methods of valuation
• B)we get a higher value of equity under the equity method of valuation
• C)we get a lower value of equity under the equity method of valuation
• D)we get equity values that cannot be compared across the equity and enterprise methods of valuation

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Definitions:

LRMC

Long-Run Marginal Cost, which refers to the change in total production costs that comes from producing one additional unit of a good or service when all inputs are variable.

SRMC

Short-Run Marginal Cost (SRMC) is the cost to produce one additional unit of output when some inputs are fixed.

Grocery Store

A retail establishment that sells food and other household items.

Traffic

The movement of vehicles or people through roads, airways, or any pathway, often used to describe the congestion or flow in transport systems.