Companies Must Always Use the Equity Method When They Hold

question 82

True/False

Companies must always use the equity method when they hold between 25% and 50% of the common stock of an investee.

---

Definitions:

Marginal-Cost Curve

A graphical representation that shows how the cost of producing one additional unit of a good varies as the production volume changes.

Average-Fixed-Cost Curve

A graphical representation that shows the fixed costs of production per unit of output declining as the quantity of output increases.

Marginal-Cost Curve

A graphical representation that shows the cost of producing one more unit of a good.

Average-Total-Cost Curve

A graphical representation showing how the average total cost of production changes as the quantity of output is altered.