Final answer:
The statement that a share of Essex Motors must cost more than a share of Morris Motors based on market capitalization alone is false.
Step-by-step explanation:
The statement that a share of Essex Motors stock must be more expensive than a share of Morris Motors stock because Essex has a higher market capitalization is false. Market capitalization is calculated by multiplying the current market price of a company's shares by the total number of shares outstanding. Although it's a measure of a company's total value in the market, it does not necessarily dictate the price of a single share.
For example, if Essex Motors has 1 million shares priced at $500 each, its market cap would be $500 million. Conversely, if Morris Motors has 5 million shares priced at $80 each, its market cap would be $400 million. Although the market cap of Essex is higher, the price of an individual Morris Motors share is lower than that of an Essex Motors share.
A better comparator of individual share value is the stock price itself rather than the market capitalization. This is because a company with fewer shares outstanding but a high share price could have a higher market cap than one with more shares but at a lower price. Stock prices are influenced by a variety of factors including company performance, investor sentiment, and market trends, not just market capitalization.