The Lowest Effective Rate of Return You Could Earn on Any

question 47

Multiple Choice

The lowest effective rate of return you could earn on any of these investments is closest to:

• A) 6.250%
• B) 6.267%
• C) 6.100%
• D) 6.300%

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Definitions:

Marginal Cost

The increase in total cost that arises when the quantity produced is incremented by one unit.

Profit-maximizing Rule

The principle that firms maximize their profits by producing at a level where marginal costs equal marginal revenues.

Marginal Revenue

The increased earnings a business obtains from the sale of one extra item or service.

Marginal Cost

The increase in total cost that arises from producing one additional unit of a product.