Which of the Following Can Be Described as Direct Finance

question 122

Multiple Choice

Which of the following can be described as direct finance?

• A)You take out a mortgage from your local bank.
• B)You borrow $2,500 from a friend.
• C)You buy shares of common stock in the secondary market.
• D)You buy shares in a mutual fund.

Understand the definition and characteristics of monopolistic competition.

Identify the long-term outcomes for firms in a monopolistically competitive market, including profit potentials.

Recognize how monopolistic competitors influence prices and process output decisions.

Discern the conditions required for price discrimination within monopolistic competition.

---

Definitions:

Product Costs

The costs that are directly associated with the manufacturing of products, including direct labor, materials, and manufacturing overhead.

Variable Cost

Expenses that change in proportion to the activity of a business, such as raw materials and direct labor costs.

Contribution Margin

The remaining amount of revenue after variable costs have been subtracted, indicating how much revenue is contributing to fixed costs and profits.

Incremental Manufacturing Cost

The additional cost incurred to produce an extra unit of output, excluding fixed costs.