If There Are Large Fixed or Research and Development Costs,such

question 25

Multiple Choice

If there are large fixed or research and development costs,such as in the pharmaceutical industry,production can characterized by:

• A)negative costs.
• B)constant returns to scale.
• C)decreasing returns to scale.
• D)large variable costs.
• E)increasing returns to scale.

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Definitions:

Consolidation Worksheet

A tool used in accounting to combine the financial statements of a parent company and its subsidiaries into a single set of statements.

Fair Value

The estimated price at which an asset or liability could be exchanged between knowledgeable, willing parties in an arm's length transaction.

Book Value

The net value of a company's assets minus its liabilities, often used as a measure of the company's worth on its balance sheet.

Partial Equity Method

An accounting approach where an investor recognizes income from an investee to the extent of dividends received and changes in the investee's equity.