Soft Capital Rationing

question 20

Multiple Choice

Soft capital rationing:

• A) is costly to shareholders.
• B) is used to evaluate mutually exclusive projects.
• C) should be costless to the shareholders of the firm.
• D) solves the problem of investment timing.

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Definitions:

Purely Competitive

A market characterized by a large number of small firms, a homogeneous product, and easy entry and exit, leading to firms being price takers.

Marginal Product

The additional output that is produced by using one more unit of a particular input, keeping all other inputs constant.

Derived Demand

Refers to the demand for a good or service that results from the demand for another good or service.

Productive Resource

Assets, materials, or inputs used in the production of goods and services, including labor, capital, and natural resources.