A Flat Marginal Cost Curve Prior to Capacity Being Reached

question 40

Multiple Choice

A flat marginal cost curve prior to capacity being reached suggests that the marginal cost of providing entrance to the 100^th person is

• A)the same as that of the 1000^th person.
• B)less than that of the 1000^th person.
• C)greater than that of the 1000^th person.
• D)unrelated to the marginal cost of the 1000^th person.

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Definitions:

Risk-Free Rate Of Return

The theoretical rate of return of an investment with zero risk of financial loss, often represented by the yield of government bonds.

Exercise Price

The price at which the holder of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset or stock.

Pure Discount Bond

A type of bond that is purchased at a price lower than its face value, with the face value being repaid at the time of maturity. It does not pay periodic interest.

Risk-Free Rate

The theoretical return on investment with zero risk of financial loss, often represented by the yield on government bonds.