The General Theory of Dollar Cost Averaging Is

question 21

Multiple Choice

The general theory of dollar cost averaging is

• A) to time the market to take advantage of low stock prices.
• B) to buy more stock when prices are low and less when prices are high.
• C) to equal the performance of market averages at the lowest dollar cost.
• D) to sell as markets decline and buy as they begin to rise.

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Definitions:

Constant Marginal Cost

A situation in production where the cost to produce one additional unit of output remains the same, regardless of the volume produced.

Reaction Function

In economic models, this function represents how one player's strategy responds to the strategies of other players in a strategic game.

Demand Function

A mathematical formula expressing the amount of a product that consumers are ready and able to purchase at various prices, highlighting the price-demand relationship.

Marginal Cost

Refers to the increase or decrease in the total cost that will result from producing one more or one less unit of a product.