Which of the Following Statements Is Correct and Which Is

question 4

Essay

Which of the following statements is correct and which is not? Explain why.
a.When we all face the same prices, our tastes become the same.
b.When we all face the same prices, our tastes become the same at the margin.

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Definitions:

Fair Value

The estimated market value of an asset or liability, based on current market conditions rather than historical cost.

Trading Securities

Financial assets such as stocks or bonds, bought and held primarily for the purpose of selling them in the near term to realize short-term gains.

Fair Value

An estimate of the market value of an asset or liability, reflecting the amount for which it could be exchanged or settled between knowledgeable, willing parties in an arm's length transaction.

Retained Earnings

Profits that a company has reinvested into the business rather than distributing to shareholders as dividends.