Use the Following to Answer Questions

question 108

Multiple Choice

Use the following to answer questions :
Figure: Strawberries and Submarines II
-(Figure: Strawberries and Submarines II) Look at the figure Strawberries and Submarines II. The downward slope of the production possibility frontier implies that resources:

• A)must be used efficiently.
• B)are scarce.
• C)should not be wasted.
• D)should be allocated so that approximately equal amounts of both goods are produced.

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Definitions:

Interest Tax Shield

A reduction in taxable income resulting from deductible interest expenses, typically from debts.

Tax Rate

The proportion of income or profits on which individuals or corporations pay taxes.

Optimal Capital Structure

The proportional mix of debt and equity financing that minimizes a company's cost of capital and maximizes its value.

Market Price

The market's ongoing price for an asset or service available for sale or purchase.