Capital Rationing

question 93

Multiple Choice

Capital rationing:

• A) is a way of preserving the assets of the firm over the long term.
• B) is a less than optimal way to arrive at capital budgeting decisions.
• C) assures shareholder wealth maximization.
• D) assures maximum potential profitability.

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Definitions:

Tariff Revenue

Income that a government collects from imposing duties on imported goods.

Consumer Surplus

The divergence between the amount consumers are willing to pay for a product or service and the amount they actually pay.

Producer Surplus

Producer surplus is the difference between what producers are willing to accept for a good compared to what they actually receive, usually measured by the area above the supply curve and below the market price.

Total Surplus

The aggregate net advantage to society, encapsulated by both consumer and producer surplus within a market.