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The marginal rate of technical substitution is

the rate at which the firm can substitute labour for capital while holding output constant.

none of the above

the slope of the isocost curve.

the rate at which the firm can substitute labour for capital while holding total cost constant.

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The long run is a time frame in which

the firm is able to maximize revenue.

the quantities of all factors of production can be varied.

the firm may want to build a bigger plant, but cannot do so.

economic efficiency is achieved.

the firm can hire all the workers it wants to employ, but it does NOT have sufficient time to buy more equipment.

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Isoquants are usually drawn convex when viewed from the origin, reflecting the standard assumption

that both factors are subject to the law of diminishing returns.

the positive marginal productivity of all factors.

negative marginal productivity of all factors.

that both factors are subject to increasing returns.

that the variable factor is subject to the law of diminishing returns.

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In the long run, the law of diminishing marginal returns

does NOT hold because technology is a variable.

sometimes holds, depending on the production process.

does hold, regardless of production process.

is exactly the same as in the short run.

is NOT relevant because there are no fixed factors of production.

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An isoquant shows

the whole set of technically efficient factor combinations that can produce a single level of output.

the alternative factor combinations that require the same expenditure.

various levels of output that can be produced with different factor combinations.

the whole set of technically efficient factor combinations that can produce varying levels of output.

various levels of output that can be produced with a fixed factor combination.

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The dividend is a portion of a company's profits distributed to shareholders.

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Which of the following is an example of using internal funds to finance a company's operations?

Taking out a bank loan

Selling company shares to investors

Issuing bonds to the public

Using profits earned by the company to reinvest in the business

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Miami Ltd started trading in 2013 and made a profit for the year of $100,000. In 2014, it made a loss of $60,000. For 2014, its board of directors decided to distribute dividends of $45,000. This decision is lawful.

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Companies are allowed to use their profits and distribute it as dividend. However, they are prohibited from distributing its capital. What is the rational behind this restriction?

to use for salary and wages of employees

to protect prospective creditors due to the limited liability of the shareholders.

to facilitate a non-current asset replacement plan.

to enable the payment of future dividends.

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What is an advantage for a company to go public?

To be monitored closely by regulatory bodies

To adhere to more rules and regulation

To raise more capital through the stock market

To produce audited financial statements

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