According to Euler's Theorem, If Competitive Firms Pay Each Factor

question 63

Multiple Choice

According to Euler's theorem, if competitive firms pay each factor its marginal product and the production function has constant returns to scale, the sum of all factor payments will equal:

• A) total investment.
• B) total saving.
• C) total profits.
• D) total output.

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Definitions:

Income Tax Expense

The cost of income taxes a company must pay, reported in the income statement as part of its expenses.

Dividends

Funds disbursed by a company to its shareholders, frequently as an allocation of earnings.

Retained Earnings

The portion of a company's profit that is held back and not distributed to shareholders as dividends, often reinvested in the business.

Cash Available

The amount of liquid assets that are readily available for use by a company or individual.