A Firm Has 1,000 Shareholders

question 57

Multiple Choice

A firm has 1,000 shareholders. Both you and Ms. Hostile are among them. Ms. Hostile owns 150 shares and is trying to fire the management, so management is offering to buy her out for a
$10 a share premium. The current market price per share is $30. What will be the value of
Each of your shares if Ms. Hostile takes this offer?

• A)$27.14
• B)$20.25
• C)$40.00
• D)$28.24

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Definitions:

Good

An item or service that satisfies human wants and provides utility, which can be transferred or sold.

Sellers

Individuals or entities that offer goods or services in exchange for monetary or other forms of compensation.

Producer Surplus

Producer surplus is an economic measure of the difference between the amount a producer is paid for a good compared to the minimum amount they would accept to produce that good.

Market Price

is the current price at which an asset or service can be bought or sold in the open market.