When All Investors Correctly Interpret and Use Their Own Information,as

question 27

Multiple Choice

When all investors correctly interpret and use their own information,as well as information that can be inferred from market prices or the trades of others,they are said to have:

• A)sensation seeking expectations.
• B)positive expectations.
• C)rational expectations.
• D)confident expectations.

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Definitions:

Marginal Revenue

Increase in earnings from selling an additional unit of a product or service.

TR = TC

The condition where total revenue equals total cost, indicating a break-even point in financial performance.

MR = MC

A principle in economics where the optimal level of production is reached when Marginal Revenue (MR) equals Marginal Cost (MC).

P < AVC

A condition where the price (P) of a good is less than the average variable cost (AVC), indicating a firm is not covering its variable costs and may cease production in the short run.