After Earning $30 Million in Net Income, Rolatrim Industries Distributed

question 289

Multiple Choice

After earning $30 million in net income, Rolatrim Industries distributed $5 million in dividends to their stockholders. The board of directors of the firm decided to invest the remaining $25 million back into the business. This $25 million reinvestment of profits represents:

• A) a trust fund.
• B) retained earnings.
• C) preferred capital.
• D) mutual funds.

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Definitions:

Marginal Cost Curve

A graphical representation that shows how the marginal cost of producing one more unit varies with the level of production.

TC Curve

A visual representation showing the relationship between the total cost incurred by a firm and the level of output produced.

Collusive Behavior

An agreement among firms in a market to set prices or output levels to avoid competition, often considered illegal.

Marginal Cost

The money spent on producing another unit of a product or service.