In a Typical Year, ________ New Firms Open in the United

question 174

Multiple Choice

In a typical year, ________ new firms open in the United States.

• A)more than 400,000
• B)more than 1 million
• C)less than 200,000
• D)approximately 125,000

Understand the concepts of moral hazard and agency problems in financial contexts.

Know the distinction between debt financing and invested-capital financing.

Recognize the risks involved in IPOs and stock price manipulation.

Understand the flow of savings to investments in a modern economy.

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Definitions:

Long-run Average Cost

The per-unit production cost when all factors of production, including capital, are variable, and the scale of production can be changed.

Output Units

Quantitative measures representing the amount of goods or services produced by a company or an economic system.

Constant Returns to Scale

A situation where increasing all inputs by the same proportion results in output increasing by that same proportion, indicating linear scalability of production processes.

Economies of Scale

Refers to the cost advantages that enterprises obtain due to their scale of operation, with cost per unit of output generally decreasing with increasing scale.