Generally, the Book Value of the Shareholders' Equity Is Represented

question 5

Multiple Choice

Generally, the book value of the shareholders' equity is represented by:

• A) The total assets minus the current liabilities
• B) The total assets minus the net worth
• C) The sum of preferred stock, debt and the capital surplus
• D) The sum of the par value of common stock, the capital surplus and the accumulated retained earnings

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Definitions:

Free-rider Problem

A situation in which some individuals benefit from resources or services without paying for them, leading to underprovision of those goods or services.

Marginal Private Benefit

The additional benefit received by the consumer or producer from consuming or producing one more unit of a good or service.

Marginal Social Cost

The additional cost imposed on society as a whole from producing one more unit of a good or service.

Socially Optimal

is a condition or outcome in which the allocation of resources maximizes the overall benefit to society.