The Amount of Equity in a Business Is Not Affected

question 63

Multiple Choice

The amount of equity in a business is not affected by:

• A) The percentage of total assets held in cash.
• B) Investments made in the business by the owner.
• C) The profitability of the business.
• D) The amount of dividends paid to shareholders.

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Definitions:

Profit-Maximizing Output

The level of production at which a firm achieves the greatest difference between total revenue and total cost, optimizing its profit.

Market Price

The market's current rate for transactions related to the purchase or sale of an asset or service.

Units

A standard measure or quantity used in statistics, mathematics, or physics.

Perfect Competition

A market structure characterized by a large number of small firms competing against each other, where no single firm has the market power to influence the price of the product it sells.