Which of the Following Statements Is Correct

question 271

Multiple Choice

Which of the following statements is correct?

• A) If capital is idle, the economy is producing at its full potential.
• B) The production possibilities frontier shows that there are no limits to production.
• C) A tradeoff is a limit that forces an exchange or a substitution of one thing for something else.
• D) Any point on or within the PPF is production efficient.
• E) None of the above answers are correct.

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Definitions:

CGT

Capital Gains Tax, which is a tax on the profit realized on the sale of a non-inventory asset.

Flotation Cost

The total costs incurred by a company in offering its securities to the public, including underwriting, legal, and registration fees.

Target Capital Structure

The mix of debt, equity, and other financing sources a company aims to use to finance its operations and growth.

WACC

Weighted Average Cost of Capital (WACC) is the rate that a company is expected to pay on average to all its security holders to finance its assets.