______ Occurs When One Group of Customers Pays More and Another

question 34

Multiple Choice

______ occurs when one group of customers pays more and another group pays less than the cost of providing their service.

• A) Deadweight loss
• B) Free-riding
• C) Moral hazard
• D) Cross-subsidization

---

Definitions:

Market Rate of Return

The average or expected rate of return on an investment in the market.

Tax Rate

The rate determining the tax payment required from a person or a corporation’s earnings.

Weighted Average Cost of Capital

A calculation of a firm’s cost of capital in which each category of capital is proportionately weighted, including equity, debt, and other forms of financing.

Market Risk Premium

The extra return investors demand for taking the risk of investing in stocks over a risk-free asset.