Which of the Following Statements Is True Concerning Economic Value

question 25

Multiple Choice

Which of the following statements is true concerning economic value added?

• A) A growing number of firms tie managers' compensation to EVA.
• B) A profitable firm will always have a positive EVA.
• C) EVA recognizes that the cost of capital is not a real cost.
• D) If a firm has positive present value of growth opportunities, it will have positive EVA.

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Definitions:

Purely Competitive

A market structure characterized by many sellers offering identical products, where no single seller can influence the market price.

Resource Supply Curve

A graphical representation illustrating the relationship between the price of a specific resource and the amount of it that suppliers are willing to produce and sell.

Nominal Wage

The amount of money paid to an employee without adjustment for inflation or deflation, often referred to as the dollar wage.

Price Level

The mean of present costs for all types of products and services generated within the economy.