The Next Questions Refer to the Following

question 7

Multiple Choice

The next questions refer to the following.
A publicly traded firm has 4 million shares of stock outstanding, with a current share price of $50. The value of its plant and equipment is $250 million. Its profit annually is $50 million.
-The average rate of return on existing capital is

• A) 5%
• B) 10%
• C) 15%
• D) 20%
• E) 25%

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Definitions:

MC

An abbreviation often used for Marginal Cost, which represents the cost of producing one more unit of a good.

AP

Advanced Placement, a program in the United States and Canada offering college-level curriculum and examinations to high school students.

AVC

Average Variable Cost; the total variable costs divided by the number of units produced, indicating the variable expense per unit of output.

MP

Marginal Product, which refers to the increase in output that results from employing an additional unit of input, holding all other inputs constant.