There May Be a Change in the Marginal Cost of Capital

question 28

Multiple Choice

There may be a change in the marginal cost of capital curve because

• A)the tax rate charged to investors changes.
• B)the firm has exhausted its supply of retained earnings.
• C)the firm is limited in the amount of depreciation it can take.
• D)the tax rate charged to investors changes and the firm has exhausted its supply of retained earnings.

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Definitions:

Demand Curve

The demand curve is a graph showing the relationship between the price of a good and the amount that consumers are willing and able to purchase at various prices.

Consumer Surplus

The gap between what consumers are ready and can afford to pay for a product or service, versus what they actually spend.

Producer Surplus

The difference between the amount that a producer is paid for a good or service and the minimum amount they are willing to accept for it.

Marginal Revenue

The additional income derived from the sale of one more unit of a good or service.