If, in a Competitive Market, Marginal Benefit Is Less Than

question 413

Multiple Choice

If, in a competitive market, marginal benefit is less than marginal cost,

• A) the net benefit to consumers from participating in the market is less than the net benefit to producers.
• B) the government must force producers to raise prices in order to achieve economic efficiency.
• C) the quantity sold is greater than the equilibrium quantity.
• D) the quantity sold is less than the equilibrium quantity.

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Definitions:

Surrogate Beta

Surrogate beta is a method used in finance to estimate the beta of a project or investment by using the beta of a similar, publicly traded company or project as a proxy.

Pure Play Method

A valuation technique that involves comparing the firm of interest to another company that has a single line of business similar to the target company.

Real Option

The right, but not the obligation, to undertake certain business initiatives, such as deferring, abandoning, expanding, staging, or contracting a project at a future date.

Capital Budgeting

The process of analyzing and ranking potential expenditures or investments that are significant in amount, to determine which projects will provide the best return.