Pareto Efficiency Implies That

question 11

Multiple Choice

Pareto efficiency implies that

• A) all legal transactions have taken place.
• B) the distribution of income is equitable.
• C) all mutually beneficial transactions have taken place.
• D) only people facing price distortions still wish to undertake transactions.

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Definitions:

Price-Earnings Ratio

A valuation ratio of a company's current share price compared to its per-share earnings, used to determine if the stock is over or under-valued.

Book Value Per Share

The shareholder equity available per outstanding share of a company, calculated by dividing total equity by the number of shares outstanding.

Statement of Comprehensive Income

A financial report that includes not only net income, but also other forms of comprehensive income such as unrealized gains or losses on investments.

Earnings Before Interest and Taxes

A financial metric indicating the profitability of a business before accounting for interest and tax expenses.