When a Firm Experiences a Positive Technological Change

question 255

Multiple Choice

When a firm experiences a positive technological change

• A)the price of a share of the firm's stock rises.
• B)the firm is able to produce more output using the same inputs, or the same output using fewer inputs.
• C)the value of the firm's assets rises.
• D)the firm will hire additional workers in order to increase production.

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Definitions:

Overvalued

A term used to describe securities or assets that are trading at a price higher than their intrinsic or fundamental value.

Consolidated Common Stock

Common stock of a parent company combined with that of its subsidiaries in a consolidated financial statement, showing the total ownership interest in the consolidated entity.

Goodwill Impairment

A charge that companies record when the book value of goodwill exceeds its fair market value, indicating that the asset is not as valuable as previously thought.

Fair Value

The estimated market value of an asset or liability, based on current prices in active markets.