Dave Builds Bird Houses at a Negligible Cost

question 134

Multiple Choice

Dave builds bird houses at a negligible cost. He sells 5 percent more bird houses this year than last year. The market price this year is 2 percent lower than last year. Which inflation rate makes Dave as well off this year as last year?

• A) 2 percent
• B) 3 percent
• C) 5 percent
• D) 7 percent

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Definitions:

Cash Dividend

A payment made by a company out of its earnings to shareholders, usually in the form of cash.

Dividends Payable

A liability indicating the amount of dividends that a company has declared to pay out to its shareholders but has not yet paid.

Dividends Declared

profits that a company's board of directors has decided to distribute to shareholders, typically in the form of cash payments or additional shares.

Shareholders' Equity

The residual interest in the assets of a company after deducting liabilities, representing the ownership interest of shareholders.