A Variable Input in a Fixed- Proportions Production Function Exhibits

question 83

Multiple Choice

A variable input in a fixed- proportions production function exhibits:

• A)diminishing marginal productivity everywhere.
• B)positive, constant, or zero marginal productivity.
• C)diminishing and then constant marginal productivity.
• D)constant and then falling marginal productivity.

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Definitions:

Constant Growth DCF Model

A method of valuing a company using the theory that its stock is worth the sum of all its future cash flows, discounted back to their present value at a constant growth rate.

Perpetual Preferred Stock

A type of preferred stock with no fixed maturity date, where dividends must be paid by the company before dividends are paid to common stockholders.

Expected Return

The weighted average of all possible returns for an investment, with weights representing the probabilities of each outcome.

Required Return

The minimum gain investors expect from an investment, considering its risk level; synonymous with required rate of return.