When Tobin's Q Is Greater Than One,________

question 12

Multiple Choice

When Tobin's q is greater than one,________.

• A)a unit of a firm's stock (equity)is worth more than a unit of the firm's capital
• B)a new unit of capital has more value than a new unit of stock (equity)
• C)installed capital is worth less than new capital
• D)a unit of capital that a firm owns has more value than a unit it might buy

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Definitions:

Economic Profit

The difference between total monetary revenue and the total costs of inputs (including opportunity costs), representing the financial gain exceeding the economic opportunity lost.

Normal Rate

The standard or usual rate for a task or service, often related to wages or interest.

Cost Per Bushel

A measure of the expenses incurred to produce a bushel of an agricultural product, such as grains.

Profit

The financial gain realized when the revenue generated from a business activity exceeds the expenses, costs, and taxes needed to sustain the activity.