Related to the Economics in Practice on P

question 36

Multiple Choice

Related to the Economics in Practice on p.88: Which of the following best explains why the people who wait for hours to acquire tickets to free performances earn less on average than the people who actually see those performances?

• A)The value of time spent waiting in line is less for people who earn less money.
• B)People who earn more money are less likely to be aware of the opportunity to acquire free tickets.
• C)High-wage individuals are more likely to have schedule conflicts that prevent them from using their tickets.
• D)People interested in live performances are likely to have access to other forms of entertainment,such as television and radio.

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Definitions:

Cannibalization

The reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.

Pre-Tax Cash Flow

The amount of cash that a company generates before accounting for taxes, used in evaluating its financial performance.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, and jurisdiction.