The Marginal Principle of Retained Earnings States That the Corporation

question 33

True/False

The marginal principle of retained earnings states that the corporation must be able to earn a higher return on retained earnings than shareholders could receive for themselves after paying taxes on the distributed dividends.

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Definitions:

Economies of Scale

Reduction in per unit cost as the volume of production increases, due to factors like bulk purchasing and efficient use of resources.

Technological Change

The overall process of invention, innovation, and diffusion of technology or processes.

Returns to Scale

The rate at which output increases in response to proportional increases in all inputs or resources, reflecting the production efficiency of a firm.

Long-Run Average Total Cost

The per unit cost of production in the long run, where all inputs, including capital, are variable.