You Are Trying to Decide in Which of the Three

question 32

Multiple Choice

You are trying to decide in which of the three companies you should invest. Refer to the following Payoff Table. If the market declines in the next year, which of the following statements are correct?
i. The Opportunity Loss for Company A is $250.
ii. The Opportunity Loss for Company B is $150.
iii. The Opportunity Loss for Company C is $0.

• A) (i), (ii), and (iii) are all correct statements.
• B) (i) is a correct statement but not (ii) or (iii).
• C) (ii) is a correct statement but not (i) or (iii).
• D) (ii) and (iii) are correct statements but not (i).
• E) (i), (ii), and (iii) are all false statements.

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Definitions:

Returns To Scale

The rate at which production output increases in response to a proportional increase in all inputs (labor, capital, etc.).

Production Function

An equation that describes the relation between inputs used in production and the output resulting from their use.

Input

Resources used in the process of production, including labor, materials, and capital.

Isoquants

Curves that represent combinations of different factors of production that yield the same level of output, used in production theory.