1. The cost of capital is

a. called accounting profit.

b. the cost of debt, or interest, plus the cost of equity, or the alternative return owners could have gotten had they not chosen to invest in this activity.

c. usually considered to be just the interest paid on debt.

d. the same as the rate charged by the U.S. government for a 30-year Treasury bill.

e. measured by the Dow Jones Industrial Average at the close of any given day.

2. To produce where marginal cost is equal to marginal revenue is called

a. the marginal-revenue rule.

b. the marginal-cost rule.

c. the profit-maximizing rule.

d. breaking the rules.

e. being forced out of business.