Which of the Following Is an Example of a Producer

question 62

Multiple Choice

Which of the following is an example of a producer taking advantage of economies of scope?

• A)A farmer buys more land so he can produce more soybeans.
• B)GM closes a Chevy truck plant in response to a decline in the demand for trucks.
• C)Disney World stays open later to serve more customers per day.
• D)A dairy farmer produces cow's milk and butter.
• E)A mouthwash firm expands production by improving management efficiency.

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Definitions:

Equity Method

An accounting technique used by companies to assess their investments in other companies, where the investment's carrying value is adjusted to reflect the investor's share of the investee's income or losses.

Cash Dividends

Payments made by a company out of its profits to its shareholders, usually in the form of cash.

Goodwill

An intangible asset that represents the excess of the purchase price over the fair market value of an acquired company's identifiable assets and liabilities.

Fair Value

The estimated market value of an asset or liability in an arm's length transaction between informed and willing parties.