Table 2-9 Table 2-9 Shows the Output Per Week of Week

question 138

Multiple Choice

Table 2-9
Table 2-9 shows the output per week of two jewelers, Serena and Haley. They can either devote their time to making bracelets or making necklaces.
-Refer to Table 2-9. What is Serena's opportunity cost of making a necklace?

• A) 2 necklaces
• B) 1/2 of a bracelet
• C) 1/2 of a necklace
• D) 3/4 of a bracelet

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Definitions:

Earnings Multiple

A valuation metric that shows how much investors are willing to pay for one dollar of earnings; commonly used in the P/E (price-to-earnings) ratio.

Extraordinary Item

Transactions and events that are both unusual and infrequent in nature, distinctly separate from the ordinary activities of the company, often excluded from the assessment of its ongoing operational performance.

Transitory Earnings

Earnings that are considered to be non-recurring or not indicative of the company's future earning potential.

Permanent Earnings

Profits generated by a company that are expected to continue in the future, excluding one-time events or transactions.