A Canadian Province Wants to Build a New Highway

question 34

Multiple Choice

A Canadian province wants to build a new highway. Which method of raising money would it most likely use?

• A) issue bonds
• B) issue preferred shares
• C) issue common shares
• D) borrow from a bank

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Definitions:

Fixed Costs

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

Marginal Cost

The expense incurred from manufacturing an extra unit of a product or service.

Average Cost

The total cost of production divided by the number of goods or services produced, often used to determine profitability.

Maximize Profit

The process or strategy by which a business attempts to achieve the highest possible profit from its operations, often by increasing revenue, reducing costs, or both.