You Bought Some Shares of Stock and Sell Them One

question 62

Multiple Choice

You bought some shares of stock and sell them one year later.At the end of the year,the price per share was 5 percent higher and the price level was 3 percent higher.Before taxes,you experienced

• A)both a nominal gain and a real gain,and you paid taxes on the nominal gain.
• B)both a nominal gain and a real gain,and you paid taxes only on the real gain.
• C)a nominal gain and a real loss,and you paid taxes on the nominal gain.
• D)a nominal gain and a real loss,and you paid no taxes on the transaction.

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Definitions:

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, leading to price taking behavior.

Monopolistically Competitive

Refers to a market configuration in which multiple companies offer products that are alike but not exactly the same, enabling considerable distinction and a limited amount of influence over the market.

Cost Curves

Graphical representations of how the costs of producing goods or services change with varying levels of output.

Perfectly Competitive

Referring to a market structure where there are many buyers and sellers, all selling homogeneous products, with no barriers to entry or exit, leading to price determination by supply and demand forces alone.