Suppose You Own 100 Shares of IBM Stock Which You

question 10

Essay

Suppose you own 100 shares of IBM stock which you intend to sell today. Since you will sell it in the
secondary market, IBM will receive no direct cash flows as a consequence of your sale. Why, then,
should IBM's management care about the price you get for your shares?

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Definitions:

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, representing the profits that exceed normal expected profits.

Marginal Revenue

The surplus earnings generated by the sale of one extra unit of a product or service.

Output

The quantity of goods or services produced in a given time period by a firm, industry, or country.

Output

The complete sum of outputs, whether goods or services, created by an enterprise, industry, or economic entity.