Because, in Many Industries the Cost of Generating New Ideas

question 113

Multiple Choice

Because, in many industries the cost of generating new ideas is so high, firms must:

• A) charge a price equal to the marginal cost
• B) charge a price higher than the marginal cost
• C) charge a price lower than the marginal cost
• D) charge a price equal to the average fixed cost
• E) charge a price lower than the average fixed cost

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Definitions:

Earnings Per Share

A financial ratio that measures the amount of net income earned per share of stock outstanding.

Cash Dividends

Cash payouts by a company to its stock owners, regularly as a sharing of profits.

Net Income

The amount of profit left after all expenses, taxes, and costs have been subtracted from total revenue.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting its liabilities, often referred to as shareholders' equity.