For the Typical Small Firm, the Primary Source of Equity

question 52

Multiple Choice

For the typical small firm, the primary source of equity capital for financing growth is

• A) operating profits.
• B) outside investors.
• C) spontaneous debt financing.
• D) retained earnings.

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Definitions:

Bowed Outward

Refers to the shape of a production possibility frontier that indicates increasing opportunity costs for producing two goods.

Opportunity Cost

The cost of foregone alternatives; the value of the best alternative given up when a decision is made to choose one option over another.

Production Possibilities Frontier

A curve depicting all maximum output possibilities for two goods, given a set of inputs, representing the trade-off between different choices in the allocation of resources.

Opportunity Cost

Giving up possible gains from several options by choosing a particular one.