Scenario 9.2 Consider a Publicly Held Firm (One Whose Stock Shares Are

question 27

Multiple Choice

Scenario 9.2
Consider a publicly held firm (one whose stock shares are traded on the stock exchange) that earned revenue worth $350 million and incurred land, labor, and debt costs worth $320 million. The stockholders who have invested a total of $100 million in this firm could have earned 10 percent return on other comparable investments.
-A zero economic profit is not a bad thing because:

• A)it is a situation in which the owners, or shareholders, of a firm could not do better elsewhere.
• B)it is a situation in which the resources of a firm are always optimally utilized.
• C)it means that a firm is paying an interest rate that is below the market rate.
• D)it means that stock prices will not fall.
• E)it means that investors are better off in the current venture than they would be in any other investment.

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Definitions:

Empathy-Altruism Model

A theory suggesting that feeling empathy for someone in need can prompt altruistic behavior, aiming to help solely for the benefit of the other person.

Numerous Onlookers

The presence of a large number of observers or spectators, often referred to in contexts of public events or occurrences witnessed by many.

Ambiguous Situation

A situation where information is unclear or lacks specificity, leading to multiple interpretations.

Low-density Population

An area characterized by a small number of people living in a given geographic region, resulting in a low population density.