The Principle of Scarcity Applies To

question 24

Multiple Choice

The principle of scarcity applies to:

• A) the poor exclusively.
• B) all consumers.
• C) all firms.
• D) everyone-consumers, firms, governments, and nations.

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Definitions:

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, and jurisdiction.

Decision Tree

A form of scenario analysis in which different actions are taken in different scenarios.

Abandonment Option

Allows a company to reduce the capacity of its output in response to changing market conditions. This includes the option to contract production or abandon a project if market conditions deteriorate too much.