It Is Wise to Keep a Reserve Equal to One-Fourth

question 40

True/False

It is wise to keep a reserve equal to one-fourth of the start-up investment.

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Definitions:

Economic Profit

The difference between a firm's total revenues and its total costs, including both explicit and implicit costs, representing the surplus value created by a firm beyond the normal return to its inputs.

Market Price

The current price at which an asset or service can be bought or sold in a public marketplace.

Colluded

When two or more parties come together, often in secret, to limit open competition by deceiving or defrauding others of their legal rights, or to obtain an objective forbidden by law typically by defrauding or gaining an unfair market advantage.

Demand Curve

A graphical representation of the relationship between the price of a good or service and the quantity demanded for a given period.