When Capital Increases By $\Delta$ K Units and Labour Increases By $\Delta$

question 39

Multiple Choice

When capital increases by $\Delta$ K units and labour increases by $\Delta$ L units,output ( $\Delta$ Y) increases by:

• A) \(\Delta\)K + \(\Delta\)L units.
• B) MPL + MPK units.
• C) (MPK × \(\Delta\)K)+ (MPL × \(\Delta\)L)units.
• D) (MPL × \(\Delta\)K)+ (MPK × \(\Delta\)K)units.

---

Definitions:

Entity Method

An approach in accounting where the financial performance and position of a business entity are considered separately from its owners.

Unrealized Profits

Profits that have been generated on paper from an investment but have not yet been realized through the sale of that investment.

Upstream Sales

Transactions where a subsidiary sells goods or services to the parent company or another subsidiary within the same corporate group, often scrutinized for transfer pricing.

Subsidiary's Separate-entity Earnings

The net income or loss generated by a subsidiary, considered independently before any adjustments for intercompany transactions or consolidation.