The Optimal Amount of Information to Acquire Before Making a Purchase

question 54

Multiple Choice

The optimal amount of information to acquire before making a purchase is

• A)zero.
• B)as much as technically possible.
• C)an amount such that the total cost of acquiring information equals the total benefit.
• D)an amount such that the marginal cost of acquiring information equals the marginal benefit.

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Definitions:

Zero-Sum

A situation or game where the gain of one participant comes at the expense of another, resulting in a net change of zero.

Constant Growth Rate

A stable annual increase in the value of an investment, often applied in the context of dividend growth or economic expansion.

Last Dividend

The most recent dividend payment per share declared by a company to its shareholders.

Anticipated Constant Growth

The expectation that an investment or entity will grow at a steady, predictable rate over time.