The Marginal Benefit of Going to a Movie During the Week

question 38

Multiple Choice

The marginal benefit of going to a movie during the week is currently $6 for you.Assume that the $4 price of going to the movies measures its marginal cost.Following the economic decision rule, you will:

• A)continue going to movies until the marginal benefit of doing so falls to zero.
• B)choose not to go to any movies during the week.
• C)continue going to movies until the marginal benefit of doing so falls below.
• D)not be able to enjoy a net gain from going to the movies during the week.

---

Definitions:

Cost of Debt

is the effective rate that a company pays on its total debt, an important component in calculating the cost of capital.

Security Market Line

A graphical representation of the risk-return trade-off for individual securities, illustrating the capital asset pricing model (CAPM).

Risk-free Rate

The yield from an investment that carries no risk of losing money.

Expected Return

Return on a risky asset expected in the future.