The Fact That the Price of Stock in Computer Literacy

question 10

Multiple Choice

The fact that the price of stock in Computer Literacy, Inc.increased by 33 percent in one day because it changed its name to fatbrain.com illustrates

• A) the importance of branding.
• B) the presence of irrationality in the stock trading.
• C) the absence of any basis for fairly valuing stocks.
• D) the fact that humans cannot make rational decisions about investments.

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Definitions:

Average Product

The output per unit of input, calculated by dividing the total product by the quantity of input.

Marginal Product

Marginal product is the increase in output that results from adding one more unit of a specific input, holding all other inputs constant.

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance premiums.

Law Of Diminishing Returns

An economic principle stating that if one input in the production of a commodity is increased while all other inputs are held fixed, a point will eventually be reached at which additions of the input yield progressively smaller, or diminishing, increases in output.