GM Decides to Build a New Plant Using Retained Earnings;

question 48

Multiple Choice

GM decides to build a new plant using retained earnings; all of the following are true EXCEPT:

• A) GM's tangible capital will increase as a result.
• B) GM is engaging in saving on behalf of its shareholders.
• C) GM stock appreciates in value.
• D) GM is avoiding experiencing opportunity costs.

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Definitions:

Midpoint Method

A technique used in economics to calculate the percentage change between two points, providing a more accurate measure than simple percentage calculations.

Elasticity

A measure of a variable's sensitivity to a change in another variable, used in economics to describe how the quantity demanded of a good responds to changes in price or income.

Corporate Strategy

A strategy that sets long-term direction for the total enterprise.

Business Strategy

A strategy that identifies how a division or strategic business unit will compete in its product or service domain.