Suppose You Own $50,000 of Personal Property,$5,000 of Stock in General

question 26

Multiple Choice

Suppose you own $50,000 of personal property,$5,000 of stock in General Statics Corporation,a $10,000 savings account,and $20,000 of government bonds.If General Statics goes bankrupt,the most you could lose is:

• A) $50,000.
• B) $5,000.
• C) $35,000.
• D) $85,000.

Understand the concept of utility maximization in neoclassical economics and how behavioral economics challenges it.

Recognize the significance of impulse buying and systematic nonrational behavior in consumer decision-making.

Comprehend the importance of heuristics in decision-making processes and their impact on economic behavior.

Discuss the potential for behavioral and neoclassical economics to complement each other in understanding economic phenomena.

---

Definitions:

Equity Multiplier

A financial ratio that measures the proportion of a company’s assets that are financed by stockholders' equity, indicating the level of debt financing.

New Equity

Funds raised by a company through the issuance of shares to the public or to specific investors.

New Assets

Items of value that are acquired or added to a company's or individual's holdings, which have the potential to generate income or increase net worth.

Enterprise Multiple

A valuation metric that compares a company's enterprise value to its earnings before interest, taxes, depreciation, and amortization (EBITDA).