Which of the Following Is a Good Reason to Use

question 61

Multiple Choice

Which of the following is a good reason to use divisional costs of capital?

• A) Division managers have no vested interest in underestimating the capital costs associated with their division.
• B) Divisional costs of capital reduce are relatively easy to estimate.
• C) Comparison firms are often engaged in various lines of business.
• D) The divisions of a company represent well-defined lines of business with different risk characteristics, for example oil and gas exploration and distribution through pipelines.

Distinguish between different types of production functions and their implications for input use.

Develop problem-solving skills related to economic decision-making in agriculture.

Understand the concept of profit maximization for competitive firms.

Apply the production function concepts to determine optimal factor demands.

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Definitions:

Choices

The act of selecting between two or more possibilities, reflecting personal preference, values, or circumstances.

Availability Heuristic

The tendency to judge the probability of a type of event by how easy it is to think of examples or instances.

Probability

A measure of the likelihood that an event will occur, expressed as a number between 0 and 1.

Event

An occurrence or happening, especially one of significance, that can be observed or participated in.