Which of the Following Are the Rules for Finding the Point

question 101

Multiple Choice

Which of the following are the rules for finding the point of allocative efficiency?

• A) Produce on the PPF and then produce where the marginal benefit and marginal cost are as large as possible.
• B) Produce on the PPF and then produce where marginal benefit equals marginal cost.
• C) Produce anywhere on the PPF.
• D) Produce on the PPF and then produce where the marginal benefit exceeds marginal cost by as much as possible.
• E) Produce on the PPF and then produce where marginal benefit and marginal cost are constant.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Equity Multiplier

A financial ratio that measures the portion of a company's assets that are financed by shareholder's equity, providing insights into leverage.

Profit Margin

A financial performance ratio, calculated by dividing net income by sales revenue, indicating how much profit a company keeps from its sales.

ROE

Return on Equity (ROE) is a measure of financial performance calculated by dividing net income by shareholders' equity, indicating how effectively a company uses investments to generate earnings growth.