As a Result of a Fire, a Small Business Owner

question 101

Multiple Choice

As a result of a fire, a small business owner loses some of her computers and other equipment. If the property of diminishing returns applies to all factors of production, she should expect to see

• A)an increase in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
• B)an increase in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.
• C)a decrease in the marginal productivity of her remaining capital and an increase in the marginal productivity of her labor.
• D)a decrease in the marginal productivity of her remaining capital and a decrease in the marginal productivity of her labor.

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Definitions:

Market Price

The present value at which a service or asset is available for purchase or sale.

Disclosure

A process where a company provides important financial information to its shareholders and the public, enhancing transparency.

Neutrality

In financial reporting, the principle that information must be unbiased and free from influence or manipulation.

Top Executives

Individuals holding senior management positions within a company, responsible for overseeing its operations and strategic direction.