The Net Gain of an Activity Will Be Minimized at the Point

question 46

True/False

The net gain of an activity will be minimized at the point at which the MB equals the MC of the activity.

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Definitions:

Opportunity Cost Principle

The opportunity cost principle denotes the value of the best alternative foregone when a decision is made to pursue a particular action.

Operating Assets

Assets that are used in the day-to-day operations of a business to generate revenue, excluding investments and non-operational assets.

CAPM

The Capital Asset Pricing Model, an investment theory that shows the relationship between the expected return of an investment and market risk.

Cost of Equity

The cost of equity represents the return a firm is expected to pay to its shareholders to compensate them for their investment risk.