Gustav & Co

question 118

Multiple Choice

Gustav & Co.'s net income is $13,000, the market value of common stock is $131,000, and the book value of common stockholders' equity is $70,000. Gustav's P/E Ratio is ________ and the Price to Book Ratio is ________. (Round your answer to two decimal places, X.XX.)

• A) 10.08; 1.87
• B) 0.19; 0.53
• C) 1.87; 10.08
• D) 0.53; 0.19

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Definitions:

Economies of Scale

Cost advantages reaped by companies when production becomes efficient, as the scale of production and the quantity of output increase.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different consumers, based on market segments, capacity to pay, or purchasing contexts.

Monopoly Power

The ability of a monopolist to significantly control market price or exclude competition in a particular market.

Price Discrimination

A pricing strategy where identical or substantially similar goods or services are sold at different prices to different buyers.