Normally, What Relation Should Be Most Common Between the Expected

question 3

Multiple Choice

Normally, what relation should be most common between the expected "going-in" and expected "going-out" cap rate?

• A) The going-in cap rate should be higher than the going out.
• B) The going-out cap rate should be at least as high as the going-in rate.
• C) There is no particular relation between the two.

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Definitions:

Maximizing Profits

The process of adjusting production and operational strategies to achieve the highest possible profit from business activities.

Shut-down Decision

The choice made by a firm about temporarily or permanently ceasing operations, often because operating costs exceed revenues at the current market price.

Short-run

A timeframe in economics during which at least one factor of production is fixed and cannot be changed.

MC

is an abbreviation for Marginal Cost, which represents the change in total cost that arises when the quantity produced is incremented by one unit.