Fact Pattern 39-1A (Questions A3-A4 Apply)

question 19

Multiple Choice

Fact Pattern 39-1A (Questions A3-A4 apply)
Mountaintop Clearview Corporation authorizes Niles,its employee,to oversee its timber operation.In the course of his employment,Niles disposes of the operation's waste illegally.Orson is a Mountaintop shareholder.
-Refer to Fact Pattern 39-1A.Liability for Niles's act most likely rests with Orson to

• A)no extent.
• B)the proportionate extent of the number of shares Orson owns.
• C)the amount of Orson's investment in the firm.
• D)the full extent.

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Definitions:

Long-run Average Cost

The per-unit cost of production in the long term, where all inputs can be varied and economies of scale can be achieved.

Substitution

Substitution refers to the economic principle where users replace one good or service with another in response to changes in price, technology, or consumer preferences.

Product Transformation Curve

Curve showing the various combinations of two different outputs (products) that can be produced with a given set of inputs.

Diseconomies of Scope

A situation where the cost per unit increases as a company produces more types of products or services.