Tom Is the Only Plumber in Town, but Because He

question 31

Multiple Choice

Tom is the only plumber in town, but because he operates in a contestable market

• A) he can earn a long-run economic profit.
• B) he is always at risk of being sued.
• C) he faces potential competition.
• D) price discrimination is impossible.

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Definitions:

Discounted Cash Flow (DCF)

A valuation method used to estimate the value of an investment based on its future cash flows, adjusted for the time value of money.

Capital Budgeting Techniques

Methods used to evaluate and prioritize investment projects or expenditures, such as NPV, IRR, Payback Period, and Profitability Index.

Small Businesses

Enterprises characterized by a small number of employees, limited revenue, and size within their industry.

Internal Rate of Return (IRR)

A financial metric used to estimate the profitability of potential investments.