The "Invisible Hand" Concept Suggests That

question 36

Multiple Choice

The "invisible hand" concept suggests that:

• A)changes in product demands are only randomly reflected in changes in the demands for resources.
• B)profit maximization is inconsistent with an efficient allocation of resources.
• C)government action is necessary to correct for market failures.
• D)when firms maximize their profits, society's domestic output will also be maximized.

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Definitions:

Retained Earnings

The amount of net profit remaining for the company after distributing dividends to its stockholders.

Note Payable

A written promise to pay a specified amount of money, along with interest, by a certain date.

Interest Expense

The cost incurred by an entity for borrowed funds, recognized in the income statement.

Income Statement

A financial report that shows the revenue, expenses, and profit or loss of a business over a specific period of time.