Calculate Tobin's Q for a Firm

question 84

Multiple Choice

Calculate Tobin's q for a firm.You have the following information: MPK = 2%,R = 4%,the stock market value is $1,728,the capital stock is 12 units,and the price of stock is $120.What is Tobin's q? Given your answer,the market believes the firm should

• A)1.2;invest in more capital.
• B)1.3;disinvest in capital.
• C)0.83;disinvest in capital.
• D)0.75;invest in more capital.
• E)2.07;raise its depreciation rate.

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Definitions:

Economic Resource

Assets or inputs used in the production of goods and services, including land, labor, capital, and entrepreneurship.

Affluent Society

refers to a society that enjoys a higher standard of living due to significant wealth accumulation, leading to a focus on consumerism and allocation of resources beyond basic needs.

Economic Problem

The fundamental challenge of meeting the unlimited needs and desires of individuals with limited resources, necessitating choices and priorities in allocation.

Standard Of Living

The level of prosperity, amenities, material possessions, and basic needs accessible to a specific social class or region.