Because the Benefit Each Citizen Receives from Having an Educated

question 175

Multiple Choice

Because the benefit each citizen receives from having an educated community is a public good:

• A)the free-rider problem causes the private market to undersupply education to the community
• B)the government can potentially help the market reach a socially optimal level of education
• C)a tax increase to pay for education could potentially make the community better off
• D)all of the above are true

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Definitions:

Common Equity

The amount of capital that belongs to the common shareholders of a company, represented by common stock and retained earnings.

Stock Price

The cost of purchasing a single share of a particular company, which fluctuates based on demand and supply dynamics in the market.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital in which each category of capital (debt, equity) is proportionately weighted.

Capital Component

Individual sources of funding that make up a company's capital structure, including debt and equity.