Select the Two Alternative Factors That Can Be Said to Demonstrate

question 11

Multiple Choice

Select the two alternative factors that can be said to demonstrate that shareholder wealth has been maximised.

• A) Discounted cash flow has been minimised.
• B) Management and production costs have been minimised.
• C) Purchasing power has been maximised.
• D) The sum of discounted cash flows has been maximised.

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Definitions:

Competition

The rivalry among sellers trying to achieve such goals as increasing profits, market share, and sales volume by varying the elements of the marketing mix: price, product, distribution, and promotion.

Business-stealing Externality

A situation where a new entrant in a market captures a portion of the incumbent firms' customers, causing economic losses to existing businesses.

Product-variety Externality

An economic effect where the variety of products available in the market impacts the welfare of consumers, often positively.

Efficient Scale

The level of production at which average total costs are minimized, indicating the most cost-effective scale of operation.