Peter Morgan Sells Pigeon Pies from His Pushcart in Central

question 43

Multiple Choice

Peter Morgan sells pigeon pies from his pushcart in Central Park.Due to the abundant supplies of raw materials, his costs are zero.The demand schedule for his pigeon pies is p(y) = 150 - y/3.What level of output will maximize Peter's profits?

• A)225
• B)45
• C)450
• D)675
• E)None of the above

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Definitions:

Required Return

The minimum expected return an investor demands for holding a particularly risky investment.

Market Capitalization Rate

An alternative term often used to refer to the cost of equity or the expected return of a market portfolio.

Plowback Ratio

A metric indicating the percentage of earnings retained by a company after dividends have been paid out to shareholders.

P/E Ratio

A valuation metric that compares the current share price of a company to its per-share earnings.