You Are Trying to Decide in Which of the Three

question 12

Multiple Choice

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the market declines in the next year, which of the following statements are correct?
i. The Opportunity Loss for Company A is $300.
ii. The Opportunity Loss for Company B is $0.
iii. The Opportunity Loss for Company C is $50.

• A) (i), (ii) and (iii) are all correct statements
• B) (i) is a correct statement but not (ii) or (iii).
• C) (ii) is a correct statement but not (i) or (iii).
• D) (ii) and (iii) are correct statements but not (i).
• E) All statements are false

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Definitions:

Marginal Cost Curve

A graphical representation showing how the cost of producing one additional unit of a good varies with the level of production.

Average Variable Cost

The total variable cost divided by the quantity of output produced, representing the variable cost per unit of output.

Short-run Supply

The amount of output that producers are willing and able to sell at different prices over a short period of time, often assuming some inputs are fixed.

State License Fee

A fee required by certain state governments for the granting of a license to operate a particular business or profession within that state.