Consumers Spend Their Incomes to Get the Maximum Benefit or Satisfaction

question 218

Multiple Choice

Consumers spend their incomes to get the maximum benefit or satisfaction from the goods and services they purchase.This is a reflection of:

• A)resource scarcity and the necessity of choice.
• B)purposeful behaviour.
• C)marginal costs which exceed marginal benefits.
• D)the tradeoff problem which exists between competing goals.

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Definitions:

Homemade Dividends

A concept whereby investors create their own dividend policy by selling a portion of the shares they own to generate cash, rather than relying on company-issued dividends.

Financial Engineering

The use of mathematical techniques and models to solve financial problems or to create financial products.

Stripped Common Shares

Common shares from which certain rights have been removed, typically dividends or voting rights, often used in structured finance transactions.

Residual Dividend Approach

A method where the firm pays dividends from the residual or leftover equity after paying for all capital expenditures and working capital needs.