According to the No Marginal Improvement Principle,if X* Is the Best

question 5

Multiple Choice

According to the No Marginal Improvement Principle,if X* is the best choice,then:

• A) MB must be no greater than MC at X* or else a small increase in the activity would increase net benefits.
• B) MB must be no greater than MC at X* or else a small decrease in the activity would increase net benefits.
• C) MB must be no less than MC at X* or else a small increase in the activity would increase net benefits.
• D) the difference between MB and MC must be as great as possible.

---

Definitions:

Equity Multiplier

A financial leverage ratio that measures the proportion of a company's assets that are financed by stockholders' equity.

Dividend Yield

The ratio of a company's annual dividend payments to its share price, reflecting the earning potential from dividends for investors.

Receivable Turnover

A financial metric that measures the efficiency of a company in extending credit and collecting debts, calculated as sales divided by the average accounts receivable.

Inventory Turnover

An indicator of the number of times a firm's inventory turnover occurs during a certain period, demonstrating the effectiveness of its inventory control practices.