A University Offers a Free Shuttle Service Around Campus

question 84

Multiple Choice

A university offers a free shuttle service around campus. The opportunity cost of the shuttle service to the university is equal to:

• A)zero, since it is free to the students who use it.
• B)the wages paid to the shuttle drivers.
• C)the wages paid to the shuttle drivers plus the gasoline expenses.
• D)the highest valued alternative uses of all the resources devoted to the shuttle program.
• E)the cost of the shuttle plus the gasoline expenses.

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Definitions:

Retained Earnings

The portion of a company’s profits that is kept or retained for reinvestment in the business, rather than being paid out as dividends to shareholders.

Book Value

The net value of a company's assets minus its liabilities and intangible assets, as recorded on the balance sheet.

Stock Split

A stock split is a corporate action where a company divides its existing shares into multiple shares to boost the liquidity of the shares, while the market capitalization remains unchanged.

Retained Earnings

The portion of net income not distributed to shareholders as dividends and instead reinvested in the business.