The Idea in Economics That "There Is No Free Lunch

question 234

Multiple Choice

The idea in economics that "there is no free lunch" means that

• A) businesses would go bankrupt if they offered free lunches.
• B) the thought of a free lunch is often better than the reality of consuming it.
• C) there are opportunity costs involved even in free lunches.
• D) free lunches used by businesses to attract customers are an inefficient marketing ploy.

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Definitions:

Leverage

The use of borrowed funds to enhance the potential return of an investment.

Transaction Costs

Expenses incurred when buying or selling securities, including broker fees, commissions, and other charges that affect the profitability of investments.

Forward Contracts

Non-standardized contracts between two parties to buy or sell an asset at a specified future time at a price agreed upon today.

Organized Exchange

A regulated marketplace for the trading of securities, commodities, derivatives, and other financial instruments.