Which of the Following Investments Would You Prefer

question 47

Multiple Choice

Which of the following investments would you prefer?

• A)An investment earning 10 percent for 20 years
• B)An investment earning 8.5 percent for 20 years
• C)An investment earning 5 percent for 40 years
• D)An investment earning 3 percent for 40 years

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Definitions:

Profit

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

Total Revenue

The gross revenue of a company, being the entire sum of income from goods or services sold, prior to the deduction of any costs.

Marginal Cost

The extra expense associated with the production of an additional unit of a product or service.

Profit-Maximizing Price

The price at which a firm can maximize its profits, determined by the market structure and demand elasticity.