If There Is No Scarcity

question 266

Multiple Choice

If there is no scarcity,

• A)all marginal benefits would equal zero.
• B)the opportunity cost of an action would be greater than its sunk cost.
• C)choices are no longer rational.
• D)the marginal cost of an action is greater than its marginal benefit.
• E)an action would have zero opportunity cost.

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Definitions:

Flotation Costs

The expenses incurred by a company in issuing new securities, including legal, accounting, and underwriting fees.

WACC

Abbreviation for Weighted Average Cost of Capital, a calculation of a firm's cost of capital in which each category of capital is proportionately weighted, reflecting the cost of each type of capital (debt, equity, etc.) to the overall business.

Debt-Equity Ratio

A financial benchmark illustrating the ratio of debt to equity used in asset financing for a company.

Tax Rate

The tax obligation calculated as a percentage of income for private individuals or companies.